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.

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

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.

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.

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.

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.