US fashion label Michael Kors have come to an agreement to buy Versace in a deal valuing the venerable designer at $2.2 billion, making it the latest Italian brand to fall into foreign hands.
Michael Kors, best known for its leather handbags, has made no secret of its aspiration to grow its portfolio of high-end brands. He claimed this after buying British stiletto guru Jimmy Choo for $1.2 billion last year.
Michael Kors agreed to buy each of Versace’s outstanding shares for 1.83 billion euros ($2.2 billion), to be funded in cash, debt and shares in Michael Kors Holding Ltd. It will now be named Capri Holdings Ltd.
The Versace family, currently owning 80 percent 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. However, Donatella Versace will continue to lead the company’s creative vision.
Micheal Kors plans to grow Versace to $2 billion in revenue globally and increase its retail footprint from approximately 200 to 300 stores. It also expects to expand accessories and footwear from 35 percent to 60 percent of revenue.
Kors had been eyeing the luxury space for quite a while now. He and competitor Tapestry endured the results of expanding their affordable luxury brands too widely. Meantime, the malls in which shoppers often pick up their affordable luxury brands have become progressively miserable as shoppers head online.