Michael Kors is close to buying Versace for $US2 billion

25 September, 2018, 04:14 | Author: Shannon Aguilar
  • Why Michael Kors Is on the Verge of Buying Versace

Luxury fashion brand Versace according to reports will soon be sold.

U.S. fashion group Michael Kors Holdings Ltd has sealed an agreement to take control of Italy's Gianni Versace SpA, three sources familiar with the matter said on Monday, adding that an official announcement would be made this week.

Donatella Versace, sister of late founder Gianni, became the fashion house artistic director and vice-president after Gianni was was murdered in Miami Beach in 1997.

The Versace family, which owns 80 per cent of the company, will continue to have a role under any agreement, the people familiar with the situation said. Both companies have declined to comment on the matter for now, however.

The deal gives Michael Kors a mega-brand and red carpet favourite that is among the most recognizable and followed fashion labels in the world. A spokesman for Blackstone had no comment.

Others have expressed interest in buying Versace, including Paris-based Kering, but some are insisting the price is too high.

Shares in New York-listed Michael Kors, which a year ago acquired show brand Jimmy Choo for £896million, fell by more than 8 per cent on the rumours.

Why Michael Kors Is on the Verge of Buying Versace

The transaction would be meant 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.

Versace, known for its flamboyant style and Medusa-head logo, hired chief executive officer Jonathan Akeroyd in 2016 from Alexander McQueen. Versace has been pushing for an initial public offering, or IPO, but they failed to reach the goal due to a fluctuating market.

Versace is run by Donatella Versace, creative director, and her brother Santo Versace, chairman, who own 20 percent and 30 percent of the firm, respectively.

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 (US$786 million) and earnings before interest, tax, depreciation and appreciation (EBITDA) of 44.6 million euros.

Italian Fashion House Versace opens the Haute Couture Fashion Week.

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.

The brand has been at its most prominent in years since a hit show last September at Milan Fashion Week. She closed the collection by walking the runway herself, arm-in-arm with 1990s models including Carla Bruni and Cindy Crawford.

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