A federal judge blocked the planned $8.5 billion acquisition by Tapestry Inc., maker of Coach and Kate Spade handbags, of rival Capri Holdings Ltd., sending Capri shares down as much as 56% in postmarket trading.

The government’s court victory threatens the deal, which was set to put Michael Kors, Coach and Kate Spade under the same corporate umbrella.

A US judge blocked the pending $8.5 billion merger of US handbag and accessories maker Tapestry and Capri on Thursday, a victory for the US Federal Trade Commission in an industry where merger challenges are rare.