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Michael Kors mulls Versace buyout

US fashion group Michael Kors is reportedly set to purchase Versace in a deal worth about $2bn.

Donatella Versace, Versace’s brand’s vice-president and artistic director, will convene a meeting with staff on Tuesday to announce the deal, Italian news outlet Corriere della Sera reported.

Versace and Michael Kors did not respond to Drapers’ request for comment.

Reports have suggested the Versace family will retain a minority stake and some creative control, while Blackstone will sell its entire 20% stake in the business.

The deal should come as “no great surprise”, according to analyst Neil Saunders, managing director of GlobalData Retail, who said Michael Kors had “long desired” to firmly establish itself as a house of luxury brands.

“The American company has long desired to transform itself into a house of luxury brands, a process it started with last year’s acquisition of Jimmy Choo.

“Versace comes with a much bigger price tag of $2.35bn, almost double the $1.2bn price Michael Kors paid for Jimmy Choo. However, it would also put a big-hitting brand with true global status into Michael Kors’ stable. 

“The choice of Versace is interesting. If the deal goes through it would certainly push the group into the big league in terms of its profile in the luxury space. It also means that the company would be a player in many different categories from fragrance to home to pets, thereby giving the group a true lifestyle position,” he added.

“However, it is also the case that despite its profile, Versace has struggled to grow sales. As such, Michael Kors is not buying a perfectly performing brand, it is buying a brand that needs work and some repositioning.”

Other experts remarked upon the marriage of such distinct brands.

“It is interesting to witness the marriage of such distinct brands in order to create another multinational luxury goods conglomerate,” said Kate Swaine, a partner at law firm Gowling WLG.

“Although Michael Kors already owns Jimmy Choo, the addition of Versace is a major expansion for the group. They are not yet on the scale of LVMH or Kering but clearly have ambitions to expand their reach in the luxury goods sector.”

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