By Peter Vossner Updated Today
American fashion group Michael Kors Holdings Ltd (KORS.N) has agreed terms to acquire Versace for $2.2 billion, the Italian brand founded by Gianni Versace forty years ago.
"Michael Kors Holdings Limited, a global fashion luxury group, announced today that a definitive agreement has been signed to acquire all of the outstanding shares of Italian luxury fashion house Gianni Versace… for a total enterprise value of 1.83 billion euros," a statement said.
Private-equity giant Blackstone Group, which owns 20% of Versace, is selling its stake in the business as part of the deal.
The Italian fashion icon had been considering a market listing after U.S. private equity group Blackstone bought a 20 percent stake back in 2014 to fund overseas expansion. However, Versace has struggled to grow sales, despite a luxury-fashion boom led by Chinese consumers.
Meanwhile, Michael Kors previously acquired ladies shoe brand Jimmy Choo for $1.2 billion last year. The company, whose namesake label is best known for its leather handbags.
The company said it plans to increase Versace’s sales to $2 billion annually, more than double the current level, expanding the number of stores globally to 300 from about 200 and accelerating e-commerce development. Michael Kors said it will rename itself Capri Holdings Ltd. as it develops its multi-brand luxury strategy.
"The acquisition of Versace is an important milestone for our group," Michael Kors Chief Executive Officer John Idol said in a statement. "We are committed to investing in its growth."
Versace is still controlled by the family of Gianni, who was killed in Miami in 1997. Donatella, his 63-year-old sister, is the house's creative director and will "continue to lead the company’s creative vision," Idol said. Jonathan Akeroyd, currently Versace's CEO, will continue to lead the management team.
Michael Kors aims to lift Versace's accessories and footwear to 60 percent of sales from 35 percent, an ambitious goal for a company known better for its ready-to-wear fashions.