Jim Cramer: Why Tapestry Stock Surged After FTC Blocked Acquisition

Tapestry's Acquisition Blocked by FTC

• 🚫 The Biden administration's Federal Trade Commission blocked Tapestry's $8.5 billion acquisition of Capri Holdings.
• 🤝 The deal aimed to unite brands like Coach, Kate Spade, Stuart Weitzman (Tapestry) with Michael Kors, Versace, and Jimmy Choo (Capri).
• ⚖️ The FTC argued the merger would create an excessively concentrated player in the accessible luxury handbags market.

Tapestry Stock Performance Post-Block

• 📈 Since the merger block in October, Tapestry stock has surged 148%.
• 🚀 The stock is now up 69% year-to-date, with a significant breakout in recent months.
• 📉 This performance is notable given the stock had traded sideways for the better part of the past decade.

Wall Street's Reaction and Rationale

• 📉 Wall Street disliked the acquisition deal due to Tapestry needing to borrow billions.
• 🏦 Concerns existed about overstretching an already stressed balance sheet.
• ⚠️ There was worry that acquiring Capri, a worse operator with declining brands like Michael Kors, would derail Tapestry's business.
• ✅ Conversely, Coach has been performing well within Tapestry's portfolio.