Michael Kors is Acquiring Versace for $2.1 Billion

1652
Michael Kors

On Tuesday morning, Michael Kors ($KORS) announced they will be buying Italian luxury goods company Gianni Versace in a $2.12 billion deal.

The takeover is expected to help Michael Kors take on major rival fashion labels in Europe, such as Kate Spade owner Tapestry, and Louis Vuitton parent company LVMH. Michael Kors also said it will change its name to Capri Holdings.

Under the agreement, Donatella Versace will remain to lead the brand’s creative vision. She has played key management roles in the company since the murder of her brother Gianni Versace more than two decades ago.

Make sure to follow us on Instagram!

The Versace family will get €150 million of the purchase price in shares of Capri Holdings Ltd. Michael Kors expects to close the transaction in the fourth fiscal quarter, but it is still subject to regulatory approvals.

Donatella said the deal will “allow Versace to reach its full potential” describing it as “very exciting moment.” However, some Versace customers are not happy with the acquisition and have rushed to her social media accounts asking her the ditch the US handbag maker. The customers have expressed concerns that Versace would lose its uniqueness because of the takeover.

Shares in Michael Kors dropped nearly 8% on Monday as investors waited for the confirmation of the deal. The stock tumbled almost 2% before markets opened for the regular session on Tuesday.

Michael Kors CEO Comments

John D. Idol, Chief Executive Officer of Michael Kors issued these remarks in a statement, “The acquisition of Versace is an important milestone for our group. Versace was founded in 1978. For over 40 years, Versace has represented the epitome of Italian fashion luxury, a testament to the brand’s timeless heritage. We are excited to have Versace as part of our family of luxury brands, and we are committed to investing in its growth. With the full resources of our group, we believe that Versace will grow to over US$2.0 billion in revenues. We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth.”

Michael Kors Company Profile

Michael Kors Holdings Ltd. engages in the design and distribution of sportswear, accessories, footwear and apparel of branded women’s apparel and accessories and men’s apparel. The firm operates its business through three segments: Retail, Wholesale and Licensing.

The Retail segment operates collection stores, lifestyle stores, including concessions and outlet stores located primarily in the United States, Canada, Europe and Japan. The Wholesale segment sells the company’s products to department stores, as well as specialty retail stores and travel shopping locations.

The Licensing segment licenses its trademarks on products such as fragrances, cosmetics, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties. The company was founded by Michael David Kors on December 13, 2002 and is headquartered in London, the United Kingdom. – CNN Money

NO COMMENTS