(Bloomberg)—Handbag maker Michael Kors Holdings Ltd., No. 295 in the Internet Retailer 2018 Top 1000, will buy Gianni Versace SpA for 1.83 billion euros ($2.2 billion), bringing the American luxury company closer to its goal of becoming an international house of fashion brands.
The Italian fashion house known for its baroque designs drew interest from several suitors, people familiar with the plans said. Versace, known for its flamboyant style and Medusa-head logo, hired CEO Jonathan Akeroyd in 2016 from Alexander McQueen. The company had been working toward an initial public offering, though market conditions haven’t allowed it to move ahead.
Michael Kors said it plans to increase Versace’s sales to $2 billion annually, more than double the current level, expanding the number of stores globally to 300 from about 200 and accelerating e-commerce development. Michael Kors said it will rename itself Capri Holdings Ltd. as it develops its multibrand luxury strategy.
“The acquisition of Versace is an important milestone for our group,” Michael Kors Chief Executive Officer John Idol said in a statement. “We are committed to investing in its growth.”
Versace adds high-end couture credibility and heritage to Kors. The 40-year-old fashion house, founded by Gianni Versace, celebrates extravagance with its baroque designs, filling runway shows and red carpets with brash prints and vibrant color.
Though it boasts a sizable presence in pop culture, Versace has struggled to increase sales and attract new shoppers, especially in China, even as luxury conglomerates LVMH and Kering SA race ahead. Last year, the brand had revenue of 686 million euros and returned to profit, according to figures provided by the company.
The brand has been at its most prominent in years since a hit show in September 2017 brought back the most iconic looks from founder Gianni’s 1990s collections and designer Donatella Versace co-hosted New York’s Met Gala in May, dressing such pop culture icons as Gigi Hadid and Kim Kardashian.
Michael Kors aims to lift Versace’s accessories and footwear to 60% of sales from 35%, an ambitious goal for a company known better for its ready-to-wear fashions.
London-based Kors last year snapped up shoemaker Jimmy Choo Plc for about 896 million pounds ($1.2 billion), expanding beyond its namesake brand. Now, it’s vying with Coach owner Tapestry Inc. to build a U.S.-based multibrand fashion empire along the lines of Paris-based conglomerates LVMH and Kering SA.
Kors, whose shares are listed in New York, alarmed investors earlier this year when it reported a decline in retail sales under its main brand in the Americas, even as the smaller European and Asian markets fared better. The shares had recovered since then, trading 15% higher for the year through the end of last week, with Choo boosting the latest quarterly results. But word that a deal is close sent Kors shares down almost 9% to as low as $66.33 in New York Monday, the biggest intraday drop since May 30.
Versace family
The Versace family, which owns 80% of the company, will continue to have a role under any agreement, the people familiar with the situation said. Donatella serves as creative director, while Santo is chairman. Blackstone Group LP owns 20% of Versace, which sells leopard-print sweatshirts for 2,100 euros ($2,470) and 995-euro tartan-covered sneakers. The private equity firm plans to sell its stake in the deal, according to a person familiar with the situation.
Italian newspaper Corriere della Sera reported earlier that Versace could be sold this week for about $2 billion, with several groups interested including Kors and Tiffany & Co. (No. 150), LVMH (No. 131), PVH Corp. (No. 63) and Tapestry (No. 179) also looked at Versace in recent months, according to a report on Sunday by Women’s Wear Daily.
Versace had revenue of 686 million euros and returned to profit in 2017, according to figures provided by the company. The brand has been at its most prominent in years since a hit show last September at Milan Fashion Week. In a tribute to Gianni, Donatella Versace brought back the most iconic looks from his collections spanning the 1990s, including silk blouses mixing leopard prints with images of baroque architecture. She closed the collection by walking the runway herself, arm-in-arm with 1990s models including Carla Bruni and Cindy Crawford.