Coach owner Tapestry calls off Capri bid on regulatory blocks [Video]

Fashion group Tapestry said Thursday that it was dropping its $8.5 billion bid for Capri, the owner of luxury brands including Michael Kors and Versace, following a successful legal challenge by US regulators.

The deal was seen as an attempt to form a new global fashion giant to compete with European powerhouses.

But the Federal Trade Commission (FTC) had sued to block the merger.

In blocking the deal for Tapestry — which owns Coach — to buy Capri last month, a US court found that “the merging parties are close competitors, such that the merger would result in the loss of head-to-head competition.”

The ruling was seen as a victory for the FTC. Both the FTC and Department of Justice’s antitrust division have stepped up action against corporate mergers in recent years, citing competition concerns.

“Capri and Tapestry mutually agreed that terminating the merger agreement was in the best interests …