Michael Kors acquires Italian fashion house Versace in $2bn deal

US fashion group Michael Kors has agreed to buy Italian fashion house Versace in a deal valuing the iconic designer at $2 billion, including debt, the companies said today.

Michael Kors, best known for its leather handbags, said the acquisition will help grow its portfolio of high-end brands, after last year’s buy-out of British stiletto-heel maker Jimmy Choo for $1.2 billion.
Kors hopes to build on Versace’s luxury runaway momentum even while enhancing its powerful and iconic marketing. The acquisition will also help Kors increase its footprint with global retail chain of approximately 200 to 300 stores while also accelerating e-commerce and omni-channel development. 
Kors plans to expand both men’s and women’s accessories and footwear to grow revenues from the current 35 per cent to around 60 per cent while projecting overall sales revenues of Versace to grow to $2 billion from the current $850 million.
Michael Kors is an American fashion luxury designer brand with glamorous runaway designs with sporty attitude and a global leader in luxury accessories, footwear and ready-to-wear with a strong presence in The Americas, China and Japan.
Versace is a leading Italian fashion luxury house with iconic designs that evoke both class and runaway glamour. It offers a range of haute couture ready-to-wear, accessories and footwear for the global consumer with its reach and presence in Asia, Europe and a growing presence in the Americas.
Versace, known for its bold and glamorous designs and its Medusa head logo, was one of a clutch of family-owned Italian brands cited as attractive targets at a time when the luxury industry is riding high on strong demand from China.
“We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth,” John Idol, chairman and CEO of Michael Kors said.
As part of the deal, Michael Kors agreed to buy all of Versace’s outstanding shares for a total enterprise value of 1.83 billion euros ($2.2 billion), to be funded in cash, debt and shares in Michael Kors Holding Ltd, which will be renamed Capri Holdings Ltd.
The Versace family, which currently owns 80 per cent of the fashion house via a holding company called Givi, will receive 150 million euros of the purchase price in Capri shares.
“We believe that being part of this group is essential to Versace’s long-term success. My passion has never been stronger,” said Donatella Versace, sister of the company’s late founder, and artistic director and vice-president of the Milan-based group.
After the deal, Versace CEO Jonathan Akeroyd will remain at the helm of the company, while Donatella Versace will “continue to lead the company’s creative vision”, Idol added.
The deal is expected to close in the fourth fiscal quarter, subject to regulatory approvals.