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.

Capri Holdings (NYSE:CPRI) and Tapestry, Inc. (NYSE:TPR) have mutually agreed to end their $8.5B merger deal. “Capri and Tapestry mutually agreed that terminating the merger agreement at this time is in the best interest of both companies,

Both companies cited uncertainty around the legal process. Tapestry, Inc., the luxury brand portfolio that includes Coach, Kate Spade, and Stuart Weitzman, has announced that it has mutually agreed with Capri Holdings Limited to terminate their proposed merger.

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

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, and Capri Holdings Limited have mutually agreed to terminate their merger agreement due to legal uncertainty. Tapestry will redeem $6.1 billion in notes and maintain dividends while pursuing share repurchase program.

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.