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Michael Kors to buy a 20% stake in Italian iconic fashion house Versace

posted onSeptember 24, 2018
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American fashion group Michael Kors has sealed an agreement to take control of Versace, Italy's iconic fashion house for $2 billion, with an official announcement expected sometime this week multiple news outlets report.  

As part of the deal, private equity group Blackstone, which has a 20% stake in Versace would fully exit its holding, while the Versace family, which owns the remaining 80% of the company, would maintain its role under any agreement, according to the reports.

Neither Gianni Versace SpA nor Michael Kors Holding Ltd have commented on potential transaction yet. Donatella Versace, who serves as the company’s artistic director and vice-president, has called a staff meeting Tuesday to announce the sale, according to two people familiar with the situation. 

The purchase of Versace, one of the last independent fashion houses, reaffirms Kors' plans to expand its portfolio of brands. Last year,  the American conglomerate better know for affordable luxury, purchased British shoe brand Jimmy Choo for $1.2 billion. 

The news of the imminent Versace sale was first reported by the Milan-based daily Corriere della Sera earlier on Monday.

versace summer 2018

IPO plans on hold
The Milanese fashion house,  known for its Medusa head logo, has been considering  an initial public offering after Blackstone bought a stake back in 2014 to fund overseas expansion. The deal at the time valued Versace at around 1 billion euros. 

Sources told Reuters that Blackstone found the Italian group's performance disappointing and not sufficient to justify an IPO. "They gradually persuaded the family to look into a possible sale and introduced them to a series of buyers, including Michael Kors" the news agency quoted the sources as saying.

Several groups interested including French luxury giant LVMH, American luxury jewelry Tiffany & Co., New-York based PVH Corp. and Coach owner Tapestry Inc. also looked at Versace in recent months, according to a report by Women’s Wear Daily, a fashion-industry trade journal sometimes called "the bible of fashion."

In 2017, Versace had revenue of 686 million euros in line with the previous year, when they reached 669 million euros, according to figures provided by the company. Net profit reached 15 million euros, compared with a loss of 7.4 million euros in 2016.  

The brand has regained momentum since a hit show last September at Milan Fashion Week, where Donatella brought back the most iconic 90s looks from Gianni Versace's collections, in a tribute to her late brother who founded the world-class brand in 1978 and was murdered in 1997.

Versace is known for its innovative designs having symbolic flashy prints and bright colours.  In 2018, the company announced that it would stop using fur in its collections.

UPDATE 25/09/2018 15:01

IT IS NOW OFFICIAL: Michael Kors expands his fashion luxury group with acquisition of Versace

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Donatella Versace with Versace chief Jonathan Akeroyd (left) and Michael Kors chief executive John Idol (Photo: Rahi Rezvani)

Michael Kors Holdings Ltd announced today that a definitive agreement has been signed to  acquire Gianni Versace for $2.12 billion, including debt. The transaction is expected to close in the company’s fourth fiscal quarter, subject to specified closing conditions, including the receipt of required regulatory approvals. 

Following the close of the acquisition, Michael Kors will change its name to Capri Holdings, inspired by the Italian island which has long been recognised as an iconic, glamorous and luxury destination, the American company said.

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“The acquisition of Versace is an important milestone for our group” John D. Idol, Chairman and Chief Executive Officer of Michael Kors Holdings Limited, said in a statement. “We are excited to have Versace as part of our family of luxury brands, and we are committed to investing in its growth. With the full resources of our group, we believe that Versace will grow to over US$2.0 billion in revenues” he added.

Michael Kors also said Tuesday that following the deal, the company plans to increase Versace's retail footprint from roughly 200 to 300 stores. It also expects to expand accessories and footwear from 35 percent to 60 percent of revenue.

"This is a very exciting moment for Versace,” said Donatella Versace. “We believe that being part of this group is essential to Versace’s long-term success. My passion has never been stronger. This is the perfect time for our company, which puts creativity and innovation at the core of all of its actions, to grow.” 

Shares of Michael Kors closed down more than 8 percent in New York Monday when news of the deal leaked.