For Tapestry, which gets 76% of its revenue from Coach, a mature brand, the goal of the merger was to find new sources of growth. For Capri, Tapestry's strong data, marketing and real estate capabilities, would have potentially helped Michael Kors, Versace and Jimmy Choo end their long-time slumps.

Fashion companies Capri Holdings Limited and Tapestry -- parent companies behind the Coach and Michael Kors brands -- ended their $8.5 billion merger deal Thursday. The deal was blocked by the Federal Trade Commission.

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.

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

Shares of Coach and Kate Spade parent Tapestry jumped Thursday morning while those of Michael Kors and Versace owner Capri Holdings fell after they called off their planned merger over ongoing legal challenges.

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

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.

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.

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.