Michael Kors Nearing Deal to Acquire Versace

In a deal that would give a firmer foothold in luxury fashion to Michael Kors Holdings, the company, which is already the owner of Jimmy Choo, is said to be finalizing a deal to acquire Gianni Versace SpA that would value the company based in Italy, at over $2.35 billion.

According to those close to the negotiations, both parties could announce this deal as soon as this week.

For Kors, who is best known for affordable luxury handbags and appearances he makes on Project Runway the popular design competition show, the buyout would be a big step in building a bigger and more efficient holding company that would become a rival of LVMH the heavyweight conglomerate in France that owns Fendi, Givenchy and Louis Vuitton and Kering, the owner of Balenciage, Gucci and Saint Laurent.

While a similar conglomerate in the U.S. does not compare in terms of resources or scale, this could become the start of a new power-play entity in the U.S.

Tapestry, the owner of Coach, has adopted somewhat of a similar type model after acquiring Stuart Weitzman and Kate Spade.

The Versace family has been majority owners of the company since the start of the business, with Blackstone Group, a private equity company, having a stake of 20%. For the popular Italian brand, the last 12 months have been momentous beginning with the tribute collection of Donatella Versace the creative director last September at Milan Fashion Week. The tribute was an ode to late brother Gianni, who designed all the collections prior to his 1997 death, after which control of the business was assumed by Donatella.

Since that time, a TV show about the murder of Gianni aired and won an Emmy, a collaboration was unveiled involving Kith, and Donatella was the Met Gala co-host, and received an honor from the CFDA.

In addition, the company implemented a new no-fur policy this year. Michael Kors announced in 2017 it also was going fur-free, which makes the acquisition of Versace more in line with the values of the company.

Michael Kors brand has suffered sales losses of recent and has attempted to offset them with the improvement of product quality and reducing the number of discounts.

Selling at mass market discount stores and off-price retailers lowered the image of the brand to customers, which is something the Coach brand struggled with as well, but is attempting to rebound from.

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