Michael Kors and Versace to Join Forces in $2B Deal




 

Michael Kors Holdings Ltd. means business.

The company today made good on its intentions to expand into a larger luxury conglomerate - announcing that it has entered into an agreement to acquire all outstanding shares of Italian luxury fashion house Gianni Versace S.p.A. for an enterprise value of 1.83 billion euros, or $2.12 billion.

"The acquisition of Versace is an important milestone for our group. For over 40 years, Versace has represented the epitome of Italian fashion luxury, a testament to the brand's timeless heritage," said Michael Kors chairman and CEO John Idol. "We are excited to have Versace as part of our family of luxury brands, and we are committed to investing in its growth."

Idol said he expects Versace to grow to over $2 billion in revenues and foresees "multiple years of revenue and earnings growth." As part of its long-term expansion strategy for the brand, Michael Kors plans to add 200 to 300 Versace stores internationally and accelerate the firm's omnichannel development.

"I am proud that Versace remains very strong in both fashion and modern culture," said Donatella Versace, who took over the business 20 years ago - along with her brother Santo Versace and daughter Allegra Versace. "Santo, Allegra and I recognize that this next step will allow Versace to reach its full potential. We are all very excited to join a group led by John Idol, whom I have always admired as a visionary as well as a strong and passionate leader. We believe that being part of this group is essential to Versace's long-term success. My passion has never been stronger. This is the perfect time for our company, which puts creativity and innovation at the core of all of its actions, to grow."

In conjunction with today's news, Michael Kors also announced that it will change its name to Capri Holdings Ltd. - inspired by the Italian luxury destination island of the same name - upon closing the acquisition. Donatella, Allegra and Santo Versace will also become shareholders in Capri Holdings. Versace CEO Jonathan Akeroyd will remain in his post.

"Since I joined Versace over two years ago, our focus has been on leveraging the company's heritage and strong brand recognition worldwide, which has allowed us to experience significant growth in all regions," Akeroyd said. "Donatella's unmatched vision has led to the continued and growing success of our brand. I am thrilled to be joining Capri Holdings Limited, which will be instrumental in accelerating our growth globally."

The acquisition - which spurred speculation at Milan Fashion week this month - is expected to be dilutive to Michael Kors' earnings per share in the high-single digits in fiscal 2020, accretive in the low-single digits in fiscal 2021 and accretive in the high-single digits in fiscal 2022.

Michael Kors expects its procurement of Versace to grow its overall revenues to $8 billion in the long-term. The New York-based company last year made its first major move in becoming a global luxury player when it snapped up British shoe label Jimmy Choo for $1.2 billion.

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