Michael Kors Buys Versace For $2.59 Billion

Cornelia Mascio
Settembre 26, 2018

Versace executive Jonathan Akeroyd, designer Donatella Versace and Michael Kors CEO John Idol.

"The acquisition of Versace is an important milestone for our group", Michael Kors Chief Executive Officer John Idol said in a statement.

USA 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 note also suggests the purchase of Versace will impact Michael Kors cash flow generation, which was projected to be more than $700 million in fiscal 2019.

"This feels achievable and we believe Versace can benefit from Michael Kors'infrastructure, human capital, and relationships, but will require spending to distinguishthe brand in an increasingly competitive landscape, improve its appeal with the millennialdemographic, and elevate its distribution", Konik said.

Kors said Tuesday that it plans to open 100 new Versace stores (there are 200 in operation) at the same time that it amplifies online sales of the brand.

Like Coach, Michael Kors is changing its name as it seeks to reframe how people in perceive it. Michael Kors is still the chief creative director of his company, but the expanding company will be renamed Capri Holdings Ltd., with $8 billion in projected annual sales. The size of the company will provide Versace with a more global reach, especially in Europe and Asia, he said.

Versace employees queue to meet Donatella Versace in Milan as she announced the sale
Image Versace employees queue to meet Donatella Versace in Milan as she announced the sale

Donatella Versace will remain on as a creative director, and NPR reports that she and other family members will receive about $177 million worth of shares in the newly-formed parent company, Capri Holdings.

"This is a very exciting moment for Versace, " said Donatella Versace.

Michael Kors, best-known for its leather handbags, has made clear its ambition to grow its stable of high-end fashion brands in an industry still dominated by European players such as Louis Vuitton owner LVMH.

Versace does not disclose financial details, but documents deposited with the Italian chamber of commerce show it had sales a year ago of 668 million euros and earnings before interest, tax, depreciation and amortisation (EBITDA) of 45 million euros.

The Versace family still controls 80 percent of the company.

Shares in Michael Kors were down 0.4 percent at $66.43 in early trading in NY on Tuesday. Gucci is the biggest brand in Kering, which also Bottega Veneta and menswear brand Brioni.

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