Shares of Capri are trading nearly 23 percent below the buyout price already agreed to with Tapestry as investors fret over antitrust reviews.
Will Tapestry sell off Capri’s Versace and Jimmy Choo brands to fund the deal? Will the turnaround chops Tapestry displayed at Coach work forBut the question investors seem to be asking themselves most immediately is: Will the deal get done?
It’s common for shares of companies waiting for a buyout to close to trade at a bit of a discount — something could always go wrong — but that’s unusually widespread. And a good part of the disconnect can be attributed to angst around regulatory approval for the deal, analysts suggest. “In the merger arbitrage world, the stock price has to do with the probability of outcomes,” said Oliver Chen, an analyst at TD Cowen. “It’s really people doing math around risk.”
“It seems to me like an easy case to clear because there are so many other luxury and near-luxury brands,” he said. “This all leads me to wonder if during the compliance with the second request, the FTC stumbled onto some issue that is not merger specific.”
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