Michael Kors Close to Buying Versace, Reports Say

Michael Kors Close to Buying Versace, Reports Say

Troy Powers
September 27, 2018

Versace and Michael Kors declined to comment.

Donatella Versace attends The Metropolitan Museum of Art's Costume Institute benefit gala on May 7 in NY.

Michael Kors is reportedly set to acquire Versace for roughly $2 billion, according to Reuters and sources close to the situation.

The move is in line with the USA brand's ambition to aggregate various luxury brands - including fashion, shoes and accessories - under one larger group.

The leader of the pack is every mom's favorite handbag maker, Kors.

Milanese fashion house Versace is close to being bought out by United States luxury fashion firm Michael Kors in a deal worth around $2billion (£1.53billion), according to reports in the Italian press.

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Shares of Kors fell 7.4 per cent to US$67.32 in mid-morning trading in NY. Michael Kors couldn't immediately be reached.

Neil Saunders, managing director of the consultancy GlobalData Retail, said that buying Versace would add a "big-hitting brand with true global status into Michael Kors' stable".

USA private equity firm Blackstone, which bought 20 percent of Versace back in 2014, will fully exit its investment. CEO Jonathan Akeroyd stated that the group boasted sales of $760 million in 2016 and turnover is expected to exceed by more than a billion in the "short term". The strategy follows moves by other fashion companies.

The Milan-based label, founded in 1978 by Gianni Versace, has been run by his family since he was murdered 21 years ago. Last year, Michael Kors bought luxury shoe brand Jimmy Choo for $1.2 billion. For Hitchmough, this will allow the brand to "annex further super luxury brands" without the "taint and consumer backlash of going under a more populist high street name". "They needed a buyer who could make heavy investments". "It was overpriced", a source said. She presented her latest collection for next spring and summer last Friday during Milan Fashion Week and was honored on Sunday by the Italian Fashion Chamber. It is unclear what role the Versace family, led by Donatella, would play in an acquisition.

Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show that past year it posted sales of 668 million euros ($786 million) and earnings before interest, tax, depreciation and appreciation (EBITDA) of 44.6 million euros.

Versace's net profit last year was just under $22.7 million, compared with a net loss of $12 million the previous year.