Fashion groups Capri Holdings and Tapestry have terminated their definitive merger agreement due to the unlikelihood of receiving the required US regulatory approvals.

The termination comes a month after the companies said they would appeal the US District Court for the Southern District of New York’s decision to allow the Federal Trade Commission to block the $8.5 billion merger.

“With the termination of the merger agreement, we are now focusing on the future of Capri and our three iconic luxury houses,” said John D Idol, Capri Holdings chairman and CEO.

“Given our company’s performance over the past 18 months, we have recently started to implement a number of strategic initiatives to return our luxury houses to growth.”

Capri’s strategies included reducing its Michael Kors store count to about 650 over time and renovating the brand’s 150 stores over the next two years.

Meanwhile, Versace and Jimmy Choo’s store fleet remained flat at 230 and 220, respectively.

Similarly, Tapestry expressed confidence in the outlook of its business, with its board approving an additional $2 billion share repurchase program.

“Tapestry remains in a position of strength, with distinctive brands, an agile platform, passionate teams, and robust cash flow,” said Joanne Crevoiserat, Tapestry CEO.

Neil Saunders, GlobalData MD, said the decision to terminate the deal is a good decision and is a “lucky escape” for Tapestry amid concerns it could be overpaying at the time it made the offer.

“Tapestry would also have inherited a whole host of problems from multiple broken brands and, while it could likely fix these, it would have sapped a great deal of time and resource,” said Saunders.

“Capri now faces walking the long road to recovery alone.”