Tapestry (TPR; Baa2, BBB+; double Neg) {TPR US Equity} {CPRI US Equity}

Few updates below, none impact our view on the € lines; only screen cheap for those with minimal funding/carry costs now. 60% chance of deal failing priced in equities.

• Moody's was out affirming Tapestry at Baa2, on review for downgrade. Re. Capri it expects stabilisation in the earnings fall over next 12-18 months - somewhat in-line with current consensus that's looking for -3.5% fall in 4Q24 (-7.5% over the year) followed by mild +2% growth in FY25. We expect Moody's to stabilise outlook if deal doesn't close. It does note the forced call clause on bonds.
• Bloomberg surveyed 20 M&A specialist for downside on capri equities (i.e. on deal not closing); year-end prices generally sat at $20-25 vs. current $36 & takeover $57. That's in line with back of the hand math; ~30% slide in forward EPS against a flat forward P/E ratio of mid 5's (which it was trading at pre-deal) leaves mid to low $20s. Current share price implies a 60% chance for deal failing.
• Equity analyst views we've seen still seem skewed to closing but have been moving lower/lagging Capri equities. Legal experts quoted on the media seem uncertain this early on.