The bet on Versace comes as the U.S. group looks to refresh the more downmarket image of the Michael Kors brand and recover some of its pricing power. The combination is also aimed at reviving Versace, which returned to a net profit last year.
Versace, known for its bold and glamorous designs and its Medusa head logo, was one of a clutch of family-owned Italian brands cited as attractive targets at a time when the luxury industry is riding high on strong demand from China.
“We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth,” John Idol, chairman and CEO of Michael Kors Holdings said.
Michael Kors has agreed to buy all of Versace’s outstanding shares for a total enterprise value of 1.83 billion euros ($2.2 billion), to be funded in cash, debt and shares in Michael Kors Holding Ltd, which will be renamed Capri Holdings Ltd.
U.S. private equity firm Blackstone, which bought 20 percent of Versace for 210 million euros in 2014, will make a 156 million euro capital gain by exiting its investment, Reuters calculations show.
The Versace family, which owns 80 percent of the Milan-based fashion house, 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, the sister of its late founder who is its artistic director and vice-president.
The deal is expected to close in the fourth fiscal quarter, subject to regulatory approvals.
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