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.

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 terminates its acquisition of Capri, owner of Michael Kors, due to legal challenges, boosting shares and unveiling a $2B buyback plan.

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

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 said on Thursday it was terminating its $8.5 billion deal for Michael Kors owner Capri after the deal was blocked by a U.S. judge. Shares of Tapestry were up 5% in premarket trading, while those of Capri were down 3%.

Key Takeaways The stocks of Tapestry and Capri Holdings moved in opposite directions Thursday after the brands called off a planned merger.Tapestry, which owns Coach and Kate Spade, said it will shift its capital to an expanded stock buyback program.

Fashion group Tapestry said Thursday that it was dropping its $8.5 billion bid for Capri, the owner of luxury brands including Michael Kors and Versace, following a successful legal challenge