The multinational fashion giant Michael Kors now owns the popular Italian fashion house Versace. The deal of the acquisition was worth $2.1 billion. With this deal, the value of Versace has reached $2 billion.
This acquisition has brought the American luxury company closer to its goal of becoming an international house of fashion brands. The company plans to Versace’s sales to $2 billion annually which is more than double the current level. Along with this, it may also expand the number of stores globally to 300 from about 200 and also boost up the e-commerce development.
“The acquisition of Versace is an important milestone for our group,” Michael Kors Chief Executive Officer John Idol stated. “We are committed to investing in its growth.”
This particular deal has caused some distress to the Versace fans because the brand’s image is completely different from that of Michael Kors. Both these companies had their own entity in the fashion world and had their own separate goodwill. However, with this acquisition, the value seems to have merged now.
The Versace deal is the third billion-dollar acquisition made by Kors since early last summer. Prior to this, the company acquired high-profile fashion labels such as Kate Spade for $2.4 billion and then shoemaker Jimmy Choo for around $1.2 billion.
Private equity firm Blackstone Group, which took over a 20% stake in the firm four years ago, will sell its holding. The new owner plans to increase the number of Versace outlets and also increase the turnover, partly by increasing the sales of footwear and accessories which is a category that is often more affordable and faster-selling.
Analysts say that the Versace acquisition will help position Michael Kors as a competitor to French luxury conglomerates LVMH and Kering and the Swiss company Richemont as well. The company also aims to boost the sales to $8 billion in the long term from about $5 billion.