The acquisition of the Italian fashion house will cost Michael Kors about $2 billion. It's the latest iconic fashion brand that falls into the hands of the US group after it bought British stiletto-heel maker Jimmy Choo.
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Under the deal announced on Tuesday, Michael Kors will buy all of Versace's outstanding shares for a total enterprise value of €1.83 billion ($2.12 billion), to be funded in cash, debt and shares in Michael Kors Holding.
US private equity firm Blackstone, which bought 20 percent of Versace back in 2014, will fully exit its investment. Moreover, the Versace family, which currently owns 80 percent of the fashion house, will receive €150 million of the purchase price in shares of the Michael Kors Holdings.
Donatella Versace, sister of the company's late founder, and artistic director and vice-president of the Milan-based group said that being part of the new group was "essential to Versace's long-term success."
After the deal, Versace CEO Jonathan Akeroyd would remain at the helm of the company, said Michael Kors Chairman and Chief Executive John D. Idol, adding that Donatella Versace would continue to lead "the company's creative vision."
"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," Idol said.
Fashion house sell-out
Versace is latest independent European runway brand to decide to sell in recent months. Italy's Missoni family announced an agreement to sell a minority stake of its brand to a private equity venture backed by the Italian state before the summer, and Antwerp-based Dries Van Noten sold a majority stake to Spanish luxury group Puig in June.
Michael Kors to buy Versace for over $2 billion
As global fashion house Michael Kors announces it will acquire legendary Italian fashion giant Versace, here are highlights from a Berlin retrospective exhibition that is also set to be on show in Seoul in 2019.
Image: picture-alliance/dpa/J. Kalaene
Aiming 'long-term success' for Versace
After acquiring luxury shoemaker Jimmy Choo in 2017, global fashion house Michael Kors will be buying the Italian legendary brand established by Gianni Versace, in a deal worth more than $2 billion (€1.83 billion). Donatella Versace, Gianni's sister and the brand's creative driver, said the takeover was "essential to Versace's long-term success."
Image: picture-alliance/dpa/J. Kalaene
Versace and color
Whereas Gianni Versace's fashion in the 1980s was a combination of elegant and conservative, he tried out new styles in the 90s. He brought color into his collections unlike anyone else, letting his creations explode with brightness. As the picture above shows, he didn't shy away from strongly contrasting colors. His focus on colors even become his trademark.
Image: Versace
Versace and men's fashion
Versace also stands for the liberation of men's fashion. In the early 90s he began to create his famous shirts, which were shown in at the Berlin retrospective in early 2018. Before Versace, the tones used in men's fashion had been much more muted. He let colors explode, and some people would even go so far as to say he liberated men. In the foreground a shirt from Versace's Miami series.
Image: DW/Gero Schließ
Versace and Lady Di
Versace was a close friend of Princess Diana. A particularly lasting testimony to their close ties is the picture of Lady Di and Elton John, both steeped in sadness as they sit next to one another during the memorial service for Versace. Some of Versace's most beautiful creations are the dresses he designed for Diana, such as this simple red dress above.
Image: DW/Gero Schließ
Bondage collection
Hardly any other designer was as versatile as Versace. Over and over again, he succeeded in surprising the fashion world. In the fall of 1992, he presented his bondage collection that introduced topics like fetishes and sexuality into fashion in new ways. Plenty of leather, metal applications, necklaces and bracelets made an unmistakable statement. This dress was worn by Naomi Campbell.
Image: DW/Gero Schließ
Versace and jewelry
Versace is known not only for his clothing designs but also for creating all kinds of extraordinary accessories, ranging from vintage brooches and the so-called Medusa Necklace to plaited leather bracelets. The pictured necklace is particularly unusual and exudes a feeling of coldness. It makes an unmistakable statement when worn.
Image: fashion culture Berlin
Scarves and shawls
Versace's colorful scarves and shawls are also famous and highly coveted. They reflect the glamorous style of the Italian fashion designer. Pictured above is a shawl in the typical Versace red with a contrasting pattern in bright gold.
Image: fashion culture Berlin
A tailcoat for Sting's wedding
Versace's preference for working for the rich and famous is no secret. He was also friends with many of them. The tailcoat he designed for the wedding of the musician Sting, also a personal friend, became legend in the world of men's fashion. The piece shows how Versace freely used form and material to redefine clothing styles for men.
Image: Versace
A watch for Elton John
Gianni Versace broke a centuries-old rule with his fashion shows. The best seats weren't reserved for the wealthiest customers but for celebrities, many of whom were his friends such as Madonna, Sting and Elton John. Versace designed outfits for some of their musical tours. He also created special personal items for them, like this watch for Elton John.
Image: Versace
Versace and his models
Gianni Versace with models Linda Evangelista and Naomi Campbell on the left. The designer, considered to be the creator of the 90s supermodel era, was the victim of a bizarre slaying in 1997 by a luxury-obsessed male prostitute. When Versace's sister organized a show in Milan on the 20th anniversary of his death, many models joined the event.
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Versace, known for its bold and glamorous designs and its Medusa head logo, has become the target of a big-ticket investor at a time when the luxury industry is riding high on strong demand from China.
Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show that last year it posted sales of €668 million and earnings before interest, tax, depreciation and appreciation (EBITDA) of €45 million.
Yet, the fashion house is apparently too small to survive on its own, as globalized markets are rewriting luxury business strategy in the favor of multinationals with deep pockets and access to new creative talents.
Expansion and a new name
Meanwhile, the US group has announced it plans to grow Versace's global sales to $2 billion (€1.7 billion) globally, boost its retail footprint to 300 stores from around 200 at present and accelerate its e-commerce strategy. In addition it wants to raise the share of higher-margin accessories and footwear to 60 percent of sales from 35 percent currently.
The group also said it would be renamed Capri Holdings following the closing of the deal, which is expected by next May. "The name is inspired by the fabled island which has long been recognized as an iconic, glamorous and luxury destination," a Michael Kors statement said.
The Versace deal marks the most ambitious attempt yet by Michael Kors to create a US rival to European luxury conglomerates LVMH, Kering and Richemont. Last year, the US group — best known for its leather handbags — already bought British stiletto-heel maker Jimmy Choo for $1.2 billion.
