Versace close to deal to be bought by Michael Kors

NEW YORK (AFP) – Hallowed Italian fashion house Versace, one of the few remaining big names in the business under family control, is close to a deal to be acquired by growing industry juggernaut Michael Kors, financial media reported on Monday.

Michael Kors, whose roots are in the United States but which is headquartered in London, could announce a deal as soon as this week, said the reports, which cited unnamed sources.

The news reports varied on the size of the deal, with some saying USD2 billion and one report at USD2.4 billion. Some accounts said the brand’s iconic leader Donatella Versace would continue to have a role with the company after the deal.

Artistic director and vice-president of the group Donatella Versace has called a staff meeting in Milan yesterday, according to the Corriere della Sera newspaper.

The deal would be the latest push by Michael Kors into high-end luxury after it bought Jimmy Choo PLC in 2017 for USD1.4 billion. The brand was started in 1981 and named for its founder, who was born in Long Island, New York.

A window display in a mall advertises the fall collection of Michael Kors in Chicago, Illinois. – AFP

The transaction would be intended to position Michael Kors more fully as a competitor to Paris-based LVMH and Kering and the Swiss company Richemont among global heavyweights in luxury across various product lines, analysts said.

“The news of Versace’s acquisition by Michael Kors Holdings will come as quite a shock to followers, admirers and customers of the iconic Italian brand, which has always been characterised by its fierce narrative and aesthetic as well as its strong family values and independence,” said a note from Euromonitor International analyst Florence Allday.

“However, several years of a difficult global luxury climate, declining growth and stiff competition from brands like Louis Vuitton, Gucci and Dior, make the sale less surprising.”

Neither Versace nor Kors responded to a request for comment.

Versace was the brainchild of Gianni Versace, who was born in Calabria to a dressmaker mother and presented his first signature collection in 1978, with his brother Santo taking care of the label’s business arm.

But the designer, whose bold designs were embraced by Madonna and other mega-celebrities, was the victim of a bizarre slaying in 1997 by luxury-obsessed entertainer Andrew Cunanan in Miami.

Twenty per cent of Versace, known for its Medusa head logo, was bought by US private equity group Blackstone in 2014, and the family owns the rest.

The group boasted sales of EUR686 million in 2016 (USD760 million) and turnover is expected to exceed one billion euros in the “short term,” CEO Jonathan Akeroyd said in June.

Michael Kors’ sales in 2017 were USD4.7 billion, up from less than USD800 million in 2011 when the company went public.