Michael Kors ready to buyout Versace for US $ 2.35 billion: Reports
According to latest reports, Michael Kors Holdings Ltd. is all set to buy Gianni Versace at a whopping deal worth US $ 2.35 billion. The Versace family will continue to keep its stake in the company as per reports. This acquisition will take Kors, best known for his affordable luxury handbags, to create a more efficient holding business and will directly rival its French heavyweight conglomerate counterparts like Kering (Gucci, Balenciaga and Saint Laurent) and LVMH (who owns Louis Vuitton, Fendi and Givenchy). The fact that Versace returned to profit in 2017 and reported revenue of nearly
US $ 800 million helps the entire transaction.
After acquiring Jimmy Choo for US $ 1.2 billion last year, Michael Kors is the sole American conglomerate at this scale and resources. Tapestry, the holding that owns Coach, has reportedly made similar moves to adopt a likewise model after acquisition of Kate Spade and Stuart Weitzman. This makes owning a European luxury fashion brand like Versace an upper hand to any similar conglomerates in the US fashion industry. Currently, the Versace family owns the majority in the company while 20 per cent stakes belong to the private equity firm Blackstone Group. Recently, Versace also adopted a no-fur policy company-wide that aligns it with the Michael Kors’ sustainability pledges that included going fur-free as per an announcement last year. Michael Kors Holdings is seeking profit avenues by cashing in on Versace’s momentum and highprofile globally.
MK is also trying to compensate for recent losses by improving their product quality and holding down discounts, as they believed that selling at off-price, retailers and mass-market discount stores degraded the brand’s image in front of its loyal customers. Neil Saunders, the MD of the consultancy GlobalData Retail, shared his opinion by saying that buying Versace would add a “big-hitting brand with true global status into Michael Kors’ stable.”