Arthur J. Villasanta – Fourth Estate Contributor
New York, NY, United States (4E) – Michael Kors Holdings Limited, the New York City-based fashion company that dresses Melania Trump and Michelle Obama, will likely acquire Italian luxury fashion firm Gianni Versace S.p.A. in a deal worth more than $2 billion.
The deal will be announced within the week. Michael Kors investors were not impressed by the news, however. Shares in Michael Kors at the NYSE dropped 7% on Monday.
Private equity firm Blackstone Group LP owns 20% of Versace, and will sell its stake to Michael Kors. Analysts said Blackstone found Versace’s financial performance disappointing and wanted out. Blackstone is said to have persuaded the Versaces to look into a possible sale and introduced them to a interested buyers, including Michael Kors.
The Versace family owns the remaining 80% of the brand. Insiders privy to the deal said the Versaces will continue to have a role in the company after the consummation of the sale. Versace returned to profitability in 2017 and reported revenues of nearly $800 million.
Michael Kors and Blackstone have refused to comment on the takeover, however. Michael Kors bought luxury shoe brand Jimmy Choo plc for $1.2 billion in 2017. Jimmy Choo is famous for its “Sex in the City” stilettos.
Analysts said Michael Kors needs to strengthen its luxury retailers against rivals such as LVMH, which owns Louis Vuitton, and Tapestry, parent of Coach and Kate Spade. They said Kors buying Versace will add a “big-hitting brand with true global status into Michael Kors’ stable.”
Michael Kors and Versace might see the former finally embrace full-on luxury and forsake “affordable luxury.” The Michael Kors Collection brand and Jimmy Choo are still known more for simple, refined handbags and clothes costing a few hundred dollars. This might change when Versace enters the picture.
Surprisingly, Michael Kors has been successful in selling more expensive products at full price to a more affluent clientele. It intends to boost sales in regions such as Europe and luxury-hungry Asia.
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