Michael Kors acquires luxury fashion brand Versace for $2.1 billion

Michael Kors bags Versace for $2.1

Kors could potentially turn one of the world's most highly regarded luxury clothing brand into a household name, according to fashion insiders.

The 1.83 billion euro deal was hotly anticipated and adds the Italian brand's maximalist sensibility to its portfolio, which includes Michael Kors as well as Jimmy Choo, which was acquired for $1.2 billion past year.

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.

Donatella Versace said in her own statement that the sale "will allow Versace to reach its full potential", adding "We believe that being part of this group is essential to Versace's long-term success".

She added in the statement: "We are all very excited to join a group led by John Idol, whom I have always admired as a visionary as well as a strong and passionate leader".

Talks started before the summer, when Versace was on the radar of several investors, as Blackstone meant to exit the group, a source close to the deal 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.

John D Idol, Chairman and Chief Executive Officer of Michael Kors Holdings Limited, said that the acquisition of Versace is an important milestone for their company.

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The Versace family, which now owns 80 per cent of the fashion house via a holding company called Givi, will receive 150 million euros of the purchase price in Capri shares.

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 is terribly under-developed".

Versace is going through some changes.

Versace does not disclose financial details, but filed documents showing 2017 sales were €668m and earnings before interest, tax, depreciation and amortisation (EBITDA) €45m. Gucci is the biggest brand in Kering, which also Bottega Veneta and menswear brand Brioni.

The Versace family still controls 80 percent of the company.

Michael Kors shares were down 0.3 percent at 1443 GMT, after falling more than 8 percent on Monday when the news of the deal first emerged.

"I am a liberal but I'm exhausted of seeing the best Italian brands in fashion, food and technology being bought by foreigners", Italy's Interior Minister Matteo Salvini said.

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