Michael Kors snaps up Italy's Versace

Analysts have suggested that Michael Kors is aiming for a portfolio of high-end brands, similar to European holding companies like LVMH.

Michael Kors is reportedly nearing a deal to buy iconic Italian luxury designer Versace.

The leader of the pack is every mom's favorite handbag maker, Kors.

US fashion group Michael Kors has agreed to buy Versace in a deal valuing the revered designer at $2.12 billion, the companies said in a joint statement on Tuesday, making it the latest Italian brand falling into foreign hands.

Headquartered in London, Michael Kors who has its roots are in the United States, could announce a deal as soon as this week, said the reports which cited unnamed sources.

This outfit looks a little flashy for Michael Kors.

On Tuesday, the company confirmed the $2.1 billion sale, which will involve Michael Kors changing its name to Capri Holdings Limited.

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In recent years, Versace, which is still a favor among celebrities, has struggled to grow sales and has become second to its Italian rival Gucci, who has found a way to grow, especially among millennials. Versace is of course one of the most recognizable and beloved high-fashion outfits in the world.

The Versace family have been the majority owners in the company since its inception, It's been a momentous 12 months for the Italian brand, starting with creative director Donatella Versace's Instagram-worthy tribute collection last September during Milan Fashion Week.

Michael Kors, whose namesake label is best known for its leather handbags, has made no secret of its ambition to grow its portfolio of high-end brands after buying British stiletto-heel maker Jimmy Choo for $1.2 billion past year.

Versace had planned to float the company on the stock market but put the plans on hold owing to unfavourable conditions. Tiffany & Co. LVMH, PVH Corp. and Tapestry have all shown interest in purchasing Versace.

Last year it returned to a net profit of just under 15 million euros compared with a net loss of 7.9 million euros the previous year.

Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show the Milan-based group a year ago posted sales of €668 million ($1 billion Cdn) and earnings before interest, tax, depreciation and appreciation (EBITDA) of €44.6 million ($67.7 million Cdn).

Versace was founded by Gianni Versace in 1978.

(Copyright © 2015. All Rights Reserved.)
 
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