Versace to be bought by United States firm Michael Kors in $2bn deal
- Author: Wendy Palmer Sep 27, 2018,
Sep 27, 2018, 1:06
Versace, known for its bold and glamorous designs, is one of a clutch of family-owned Italian brands seen as attractive targets at a time when the luxury industry is benefiting from strong demand from China.
The company in its entirety is estimated to be worth some $2 billion (1.7 billion euros), the report said. Neither Versace, Michael Kors, or Blackstone had an immediate comment on the ongoing negotiations.
Gianni Versace founded his company in 1978 in Milan, building it into an global powerhouse by the time that he was shot at the age of 50 by Andrew Cunanan, a serial killer who murdered at least four other people, in 1997.
Saunders said that Michael Kors should work to tone down "some of the brasher elements" of the Versace brand in order to appeal to modern consumers.
The Versace purchase would give the Kors Holding company more high fashion credibility in the luxury space.
Michael Kors, a maker of handbags and apparel and named for its founder who appeared on reality-show Project Runway, took a major step in luxury with the 2017 acquisition of Jimmy Choo PLC in 2017 for US$1.4 billion.
"As such, Michael Kors is not buying a perfectly performing brand, it is buying a brand that needs work and some repositioning".
Headquartered in London, Michael Kors who has its roots are in the U.S., could announce a deal as soon as this week, said the reports which cited unnamed sources.
Investors appeared mixed on the linkup; Kors' stock fell six percent following the stories reporting the deal. The private equity firm plans to sell its stake in the deal, according to a person familiar with the situation.
"They didn't feel the need to invest so much money into another Italian fashion brand".
As part of the deal, Blackstone will fully exit the Italian company, while the Versace family, which owns the rest of the fashion house, will keep a role, the sources said.
In recent years, Versace, which is still a favor among celebrities, has struggled to grow sales and has become second to its Italian rival Gucci, who has found a way to grow, especially among millennials.
Last year it returned to a net profit of just under 15 million euros compared with a net loss of 7.9 million euros the previous year.