Tapestry, the owner of Coach, said it would abandon its $8.5 billion deal to buy Capri, the parent company of Michael Kors, after the Federal Trade Commission successfully sued to stop the transaction.

The parent companies of brands such as Coach, Kate Spade, Versace and Michael Kors decided not to proceed with a court battle.

After the US Federal Trade Commission halted the sale, stating that it would eliminate direct competition in the mid-tier handbag market.

Luxury fashion parent company of Coach and Kate Spade, Tapestry and global fashion luxury group Capri Holdings have mutually agreed to end their merger plans amid regulatory challenges.

Tapestry, Inc. (NYSE:TPR) shares are trading higher premarket on Thursday after the company disclosed that it has reached an agreement with Capri Holdings Limited (NYSE:CPRI) to terminate their merger agreement.

What would have been the biggest fashion industry merger since the mid-2000s died today after two major luxury brands confirmed that their $8.5 billion deal is off. When it was announced last year, the acquisition of Capri by Tapestry was touted as a way to bring several famous brands under the same roof.

Capri Holdings Ltd and Tapestry Inc. scrapped their $8.5 billion plan to merge after a court order froze the proposed combination of the US fashion companies due to antitrust regulators’ objections.

Tapestry Inc.’ stock jumped 6.8% early Thursday, while Capri Holdings Inc.’s stock fell about 4%, after Tapestry said it’s terminating its $8.5 billion merger agreement with its smaller rival.

The proposed merger that would've combined six luxury brands owned by Capri and Tapestry was abandoned by the companies due to regulatory challenges posed by an FTC lawsuit.