US fashion company Michael Kors has acquired the Italian luxury brand Versace for US$2.12 billion (NZ$3.19 billion).
The two fashion houses announced the acquisition after speculation spread about the deal, with the new owner announcing it plans to increase the number of Versace outlets from 200 to 300 stores, expand the Italian label’s men’s and women’s accessories and footwear from 35 per cent to 60 per cent of revenues and accelerate its e-commerce and omni-channel development.
When the deal closes, Michael Kors Holdings will change its name to Capri Holdings Limited.
John D. Idol, Michael Kors Holdings chair and CEO, said the acquisition of Versace, which was founded by Gianni Versace in 1978, is an important milestone for the group and that they are committed to investing in its growth.
“With the full resources of our group, we believe that Versace will grow to over US$2 billion (NZ$3 billion) in revenues,” Idol said.
Versace creative director Donatella Versace, who has been running Versace since the death of her brother in 1997, said now is the perfect time for the brand to join with Michael Kors.
“We believe that being part of this group is essential to Versace’s long-term success,” Versace said. “My passion has never been stronger. This is the perfect time for our company, which puts creativity and innovation at the core of all of its actions, to grow.”
Versace, who will stay on as creative director, her brother Santo and daughter Allegra will receive more than US$170 million (NZ$255.7 million) worth of shares in the newly united company.
Neil Saunders, managing director of GlobalData Retail, said the acquisition is good news for Versace adding that the label has needed some repositioning.
Saunders said the deal will help transform the business into one with a better international reach, especially in Europe and in Asia.
“Ultimately, this will help all brands in the stable to grow their international footprint, especially as operational activities come together,” he said.
Saunders said Michael Kors’ name change to Capri Holdings is sensible and reflects the much wider interests of the group.
“This follows the example of Coach which changed its corporate name to Tapestry following the acquisition of Kate Spade,” he said. “It is a subtle change, and one many consumers may not notice, but in our mind, it underlines the intention of the group to become a luxury powerhouse.”
He said however that the deal is not a perfect operation and will need a lot of work to position it for higher growth.
