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Tapestry, Inc. Announces Termination of Merger Agreement With Capri Holdings Limited

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Tapestry (NYSE: TPR) and Capri Holdings have mutually agreed to terminate their merger agreement, citing uncertainty in the legal process and unlikely resolution by February 2025. In response, Tapestry announced a new $2 billion share repurchase authorization, including a planned Accelerated Share Repurchase program. The company will maintain its annual dividend rate of $1.40 per share in Fiscal 2025 and redeem $6.1 billion in acquisition-related senior notes. Tapestry agreed to reimburse Capri's transaction expenses of approximately $45 million. The company reaffirmed its Fiscal 2025 outlook and emphasized its commitment to organic growth and shareholder value creation.

Tapestry (NYSE: TPR) e Capri Holdings hanno concordato di comune accordo di terminare il loro accordo di fusione, citando l'incertezza nel processo legale e la probabile risoluzione non prima di febbraio 2025. In risposta, Tapestry ha annunciato una nuova autorizzazione per il riacquisto di azioni di 2 miliardi di dollari, inclusa un programma di riacquisto accelerato di azioni. L'azienda manterrà il suo tasso di dividendo annuale di 1,40 dollari per azione per l'anno fiscale 2025 e rimborserà 6,1 miliardi di dollari in note senior legate ad acquisizioni. Tapestry ha concordato di rimborsare le spese transazionali di Capri, che ammontano a circa 45 milioni di dollari. L'azienda ha confermato le previsioni fiscali per il 2025 e ha sottolineato il suo impegno per la crescita organica e la creazione di valore per gli azionisti.

Tapestry (NYSE: TPR) y Capri Holdings han acordado mutuamente terminar su acuerdo de fusión, citando la incertidumbre en el proceso legal y la poco probable resolución para febrero de 2025. En respuesta, Tapestry anunció una nueva autorización de recompra de acciones de 2 mil millones de dólares, que incluye un programa planificado de recompra acelerada de acciones. La compañía mantendrá su tasa de dividendo anual de 1,40 dólares por acción en el año fiscal 2025 y redimirá 6,1 mil millones de dólares en notas senior relacionadas con adquisiciones. Tapestry acordó reembolsar a Capri aproximadamente 45 millones de dólares en gastos de transacción. La empresa reafirmó su perspectiva para el año fiscal 2025 y enfatizó su compromiso con el crecimiento orgánico y la creación de valor para los accionistas.

탭스트리 (NYSE: TPR)와 카프리 홀딩스는 법적 절차의 불확실성과 2025년 2월 이전의 불가능한 해결을 이유로 합병 계약을 상호 합의 하에 종료하기로 했습니다. 이에 따라 탭스트리는 새로운 20억 달러 규모의 자사주 매입 승인을 발표하였으며, 가속 자사주 매입 프로그램도 포함됩니다. 이 회사는 2025 회계연도에 대해 1주당 1.40달러의 연간 배당률을 유지하고 인수 관련 메자닌 노트에서 61억 달러를 상환할 예정입니다. 탭스트리는 카프리의 거래 비용 약 4500만 달러를 상환하기로 합의했습니다. 이 회사는 2025 회계연도 전망을 재확인하며 유기적 성장과 주주 가치 창출에 대한 의지를 강조했습니다.

Tapestry (NYSE: TPR) et Capri Holdings ont convenu mutuellement de mettre fin à leur accord de fusion, évoquant l'incertitude du processus juridique et la résolution peu probable d'ici février 2025. En réponse, Tapestry a annoncé une nouvelle autorisation de rachat d'actions de 2 milliards de dollars, incluant un programme de rachat d'actions accéléré prévu. L'entreprise maintiendra son taux de dividende annuel de 1,40 dollar par action pour l'exercice 2025 et remboursera 6,1 milliards de dollars de billets de premier rang liés à des acquisitions. Tapestry a accepté de rembourser les frais de transaction de Capri d'environ 45 millions de dollars. L'entreprise a réaffirmé ses prévisions pour l'exercice 2025 et a souligné son engagement envers la croissance organique et la création de valeur pour les actionnaires.

Tapestry (NYSE: TPR) und Capri Holdings haben einvernehmlich beschlossen, ihre Fusionsvereinbarung zu beenden. Grund dafür sind die Unsicherheiten im rechtlichen Prozess und die unwahrscheinliche Lösung bis Februar 2025. Als Reaktion darauf gab Tapestry eine neue Genehmigung zum Rückkauf von Aktien in Höhe von 2 Milliarden Dollar bekannt, einschließlich eines geplanten beschleunigten Aktienrückkaufprogramms. Das Unternehmen wird seine jährliche Dividende von 1,40 Dollar pro Aktie im Geschäftsjahr 2025 beibehalten und 6,1 Milliarden Dollar an damit verbundenen Erwerbsschulden zurückzahlen. Tapestry stimmte zu, die Transaktionskosten von Capri in Höhe von etwa 45 Millionen Dollar zu erstatten. Das Unternehmen bestätigte seinen Ausblick für das Geschäftsjahr 2025 und betonte sein Engagement für organisches Wachstum und die Schaffung von Shareholder Value.

Positive
  • Additional $2 billion share repurchase authorization announced
  • Maintaining $1.40 per share annual dividend rate for Fiscal 2025
  • Strong balance sheet and significant free cash flow generation
  • No break fee associated with merger termination
Negative
  • $45 million expense reimbursement to Capri Holdings
  • Failed merger attempt with Capri Holdings
  • Need to redeem $6.1 billion in acquisition-related debt

Insights

The termination of the $8.5 billion Capri merger marks a significant strategic pivot for Tapestry. The newly announced $2 billion share repurchase program, combined with existing $800 million authorization, creates a substantial $2.8 billion total buyback capacity. This represents approximately 23% of Tapestry's current market cap, indicating strong potential for share price support.

The redemption of $6.1 billion acquisition-related debt, while incurring a modest $45 million expense reimbursement to Capri, maintains balance sheet flexibility. The commitment to an annual dividend of $1.40 per share and target payout ratio of 35-40% demonstrates confidence in sustained cash flow generation. The focus on organic growth and disciplined capital allocation, prioritizing Coach's strength and Kate Spade's turnaround before pursuing future M&A, suggests a more measured approach to value creation.

This strategic reset positions Tapestry to capitalize on its individual brand strengths rather than pursuing complex integration challenges. The decision reflects pragmatic risk management given regulatory uncertainties, while the substantial share repurchase program signals management's confidence in standalone value creation potential.

The commitment to maintaining leverage below 2.5x EBITDA and investment grade rating while funding buybacks through new debt issuance suggests a balanced approach to capital structure. The reaffirmation of FY2025 guidance indicates the core business remains on track, independent of merger-related considerations. This pivot to organic growth could potentially lead to higher ROIC compared to the originally planned acquisition strategy.

  • Reaffirms Commitment to Driving Accelerated Organic Growth and Shareholder Value
  • Announces Additional $2 Billion Share Repurchase Authorization, Including a Planned Accelerated Share Repurchase Program
  • Executes Plans to Redeem Acquisition-Related Debt

NEW YORK--(BUSINESS WIRE)-- Tapestry, Inc. (NYSE: TPR), a house of iconic accessories and lifestyle brands consisting of Coach, Kate Spade, and Stuart Weitzman, today announced that it reached an agreement with Capri Holdings Limited (NYSE: CPRI) to terminate the merger agreement between the parties.

Capri and Tapestry mutually agreed that terminating the merger agreement at this time is in the best interest of both companies, as the outcome of the legal process is uncertain and unlikely to be resolved by the February 10, 2025 outside date.

Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc., said, “We have always had multiple paths to growth and our decision today clarifies the forward strategy. Building on our successful first quarter, we will move with speed and boldness to accelerate growth for our organic business. Tapestry remains in a position of strength, with distinctive brands, an agile platform, passionate teams, and robust cash flow. We have significant runway ahead and are pleased to announce today an additional shareholder return program, as we believe there is no better investment at this time than our own stock.”

Tapestry, Inc.’s Chief Financial Officer and Chief Operating Officer, Scott Roe, said, “Tapestry’s steadfast commitment to deliver meaningful shareholder value is unchanged. Our strong and consistent cash flow underpins our foundational commitments to invest in our brands and business as well as fund our dividend program. Further, today’s additional $2 billion share repurchase authorization highlights the strength and flexibility of our balance sheet to unlock incremental value, while maintaining our firm commitment to a solid investment grade rating. We are confident in our compelling long-term organic growth agenda and the opportunity to deliver enhanced value to all stakeholders for years to come.”

Return of Capital to Shareholders
Given Tapestry’s strong operational results, robust balance sheet, significant free cash flow generation, and outlook for growth, the Company is well-positioned to return meaningful capital to shareholders:

  • Share Repurchase Program: The Company’s Board of Directors has approved an additional $2 billion share repurchase program, which Tapestry expects to implement at least in part through an Accelerated Share Repurchase program (‘ASR’). The Company intends to fund the repurchases through a combination of cash on hand and future issuance of debt. Together with the existing $800 million outstanding on the Company’s prior authorization, there will be a total of $2.8 billion available for share repurchases over this fiscal year and beyond.
  • Dividend: In Fiscal 2025, as previously announced, Tapestry expects to maintain its annual dividend rate of $1.40 per common share. Tapestry is committed to increasing its dividend at least in-line with earnings growth over time to achieve the stated target payout ratio of 35% to 40%.

These actions are consistent with Tapestry’s stated capital allocation priorities: (i.) reinvesting in its brands and business; (ii.) capital return via the dividend; (iii.) maintaining an investment grade rating; (iv.) utilizing excess cash flow for share repurchases; and (v.) strategic portfolio management for long-term value creation.

Further, Tapestry does not expect any acquisitions in the near-term, and before moving forward with any acquisitions, the Company will ensure Coach remains strong and Kate Spade has returned to sustainable topline growth.

Balance Sheet Update
Based upon the termination of the merger agreement, the Company will redeem the senior notes associated with the planned acquisition totaling $6.1 billion in accordance with the Special Mandatory Redemption feature, for a price equal to 101% of their principal amount and accrued interest. There is no break fee associated with the transaction. Tapestry has agreed to reimburse Capri’s expenses incurred in connection with the transaction of approximately $45 million.

In addition, as noted, the Company intends to fund its share repurchase program, in part, through the future issuance of debt. The Company is maintaining its long-term leverage target of below 2.5x gross debt to adjusted EBITDA and remains firmly committed to its solid investment grade rating.

Financial Outlook
The Company is reaffirming its Fiscal 2025 outlook as issued on November 7, 2024. As previously noted, this guidance is provided on a non-GAAP basis and does not include the net benefit to earnings per diluted share related to the share repurchase program or expected changes to net interest expense. The Company will update its outlook at its next earnings announcement scheduled for February 6, 2025.

About Tapestry, Inc.
Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman. Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across channels and geographies. We use our collective strengths to move our customers and empower our communities, to make the fashion industry more sustainable, and to build a company that’s equitable, inclusive, and diverse. Individually, our brands are iconic. Together, we can stretch what’s possible. To learn more about Tapestry, please visit www.tapestry.com. For important news and information regarding Tapestry, visit the Investor Relations section of our website at www.tapestry.com/investors. In addition, investors should continue to review our news releases and filings with the SEC. We use each of these channels of distribution as primary channels for publishing key information to our investors, some of which may contain material and previously non-public information. The Company’s common stock is traded on the New York Stock Exchange under the symbol TPR.

This press release may contain forward-looking statements based on management’s current expectations. Forward-looking statements include, but are not limited to, statements regarding the Company’s capital deployment plans, including anticipated share repurchase plans, and statements that can be identified by the use of forward-looking terminology such as “may,” “can,” “if,” “continue,” “assume,” “should,” “expect,” “confidence,” “goals,” “trends,” “anticipate,” “intend,” “estimate,” “on track,” “future,” “plan,” “deliver,” “potential,” “position,” “believe,” “will,” “target,” “guidance,” “forecast,” “outlook,” “commit,” “leverage,” “generate,” “enhance,” “innovation,” “drive,” “effort,” “progress,” “confident,” “uncertain,” “achieve,” “strategic,” “growth,” “proposed acquisition,” “we can stretch what’s possible,” similar expressions, and variations or negatives of these words. Future results may differ materially from management’s current expectations, based upon a number of important factors, including risks and uncertainties such as the impact of economic conditions, recession and inflationary measures, risks associated with operating in international markets and our global sourcing activities, the ability to anticipate consumer preferences and retain the value of our brands, including our ability to execute on our e-commerce and digital strategies, the ability to successfully implement the initiatives under our 2025 growth strategy, the effect of existing and new competition in the marketplace, the effect of seasonal and quarterly fluctuations on our sales or operating results, the risk of cybersecurity threats and privacy or data security breaches, our ability to satisfy our outstanding debt obligations or incur additional indebtedness, the risks associated with climate change and other corporate responsibility issues, the impact of tax and other legislation, the risks associated with potential changes to international trade agreements and the imposition of additional duties on importing our products, our ability to protect against infringement of our trademarks and other proprietary rights, and the impact of pending and potential future legal proceedings, etc. In addition, purchases of shares of the Company’s common stock will be made subject to market conditions and at prevailing market prices. Please refer to the Company’s latest Annual Report on Form 10-K, latest Quarterly Report on Form 10-Q and its other filings with the Securities and Exchange Commission for a complete list of risks and important factors. The Company assumes no obligation to revise or update any such forward-looking statements for any reason, except as required by law.

Tapestry, Inc.

Media:

Andrea Shaw Resnick

Chief Communications Officer

212/629-2618

aresnick@tapestry.com

Analysts and Investors:

Christina Colone

Global Head of Investor Relations

212/946-7252

ccolone@tapestry.com

Source: Tapestry, Inc.

FAQ

Why did Tapestry (TPR) terminate the merger with Capri Holdings?

The merger was terminated due to uncertainty in the legal process and unlikely resolution by the February 10, 2025 deadline, with both companies agreeing it was in their best interest.

How much is Tapestry's (TPR) new share repurchase authorization?

Tapestry announced a new $2 billion share repurchase authorization, bringing the total available for repurchases to $2.8 billion when combined with the existing $800 million authorization.

What is Tapestry's (TPR) dividend plan for Fiscal 2025?

Tapestry will maintain its annual dividend rate of $1.40 per common share in Fiscal 2025, with plans to increase dividends in line with earnings growth to reach a 35-40% payout ratio.

How much will Tapestry (TPR) pay in merger termination costs?

Tapestry agreed to reimburse Capri Holdings' transaction expenses of approximately $45 million and will redeem acquisition-related senior notes totaling $6.1 billion at 101% of their principal amount plus accrued interest.

Tapestry, Inc.

NYSE:TPR

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