Versace to be bought by USA firm Michael Kors in $2bn deal

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Michael Kors ($KORS) is reportedly nearing a deal to buy Versace in a deal that would value the storied Italian fashion house at around $2 billion.

USA fashion group Michael Kors KORS.N has agreed to take control of Versace in a deal that could value one of Italy's most prized designers at $2 billion, sources familiar with the matter said on Monday.

The deal is expected to close in the fourth fiscal quarter, subject to regulatory approvals.

Last year, Michael Kors bought Jimmy Choo, the luxury shoemaker founded in London, for nearly £900m.

Michael Kors's sales in 2017 were $4.7 billion, up from less than $800 million in 2011 when the company went public.

An acquisition by Michael Kors would be a landmark deal for the fashion industry, with an American company taking over an Italian icon.

Gianni Versace founded his company in 1978 in Milan, building it into an global powerhouse by the time that he was shot at the age of 50 by Andrew Cunanan, a serial killer who murdered at least four other people, in 1997.

People are begging Versace to reconsider the deal, with fans commenting on Donatella Versace's Instagram saying Michael Kors would "kill" the brand. A spokesman for Blackstone had no comment.

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London-based Kors last year snapped up shoemaker Jimmy Choo Plc for about $1.2 billion

"I can't tell you whether he is going to sell dresses for $100 or $300, but I can tell you he is going to find a way to reach a lot more customers by broadening its playing field", Weber says. A year ago the American company acquired Jimmy Choo for $1.2bn.

Versace reported sales of €686m in 2016. Tiffany & Co. LVMH, PVH Corp. and Tapestry have all shown interest in purchasing Versace.

Donatella Versace is the brand's creative driver.

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.

"A continued prominent role for Donatella Versace will be vital in short-term, until a suitably high-profile or high potential candidate can be found to take the fashion house forward, in a similar way to how Christopher Bailey steered Burberry and Alessandro Michele has reinvigorated Gucci", he added.

Versace was founded by Gianni Versace in 1978.

Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show the Milan-based group past year 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).




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