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Michael Kors reportedly to acquire Versace in mega-deal

A major deal that would see a U.S. retail powerhouse acquire one of Italy’s most storied fashion houses is reportedly in the works.

Michael Kors Holding Ltd. is close to an agreement to buy Gianni Versace SpA, in a deal that would value Versace at about $2 billion, reported Bloomberg

Donatella Versace, who runs the company with her brother Santo Versace since the murder of their sibling and company founder Gianni in 1997, will announce the sale to employees on Tuesday, the report said. The Versace family owns 80% of the company, with the remaining 20% held by private equity company Blackstone Group.

The deal would give Michael Kors a brand that is among the most recognizable in the world, and a favorite on the red carpet. It would be the second major coup for the U.S. brand, which acquired upscale footwear brand Jimmy Choo in July 2017 in a deal estimated at $1.2 billion.

Neil Saunders, managing director of GlobalData Retail, said if the deal goes through, it would push Michael Kors into the “big league” in terms of its profile in the luxury space, and make it a player in many different categories from fragrance to home to pets, giving the company a “true lifestyle position.” But he added a note of caution, saying Versace has struggled to grow sales.

“As such, Michael Kors is not buying a perfectly performing brand, it is buying a brand that needs work and some repositioning,” Saunders said. “As much as we believe Michael Kors past experience with its own brand will help it make the changes required, these shifts will cause short-term disruption and might mean that the true benefits from the acquisition will take a number of years to deliver through. We also believe that some of the work required on Versace, which includes toning down some of the brasher elements of the brand which are now out of step with the more subtle tone preferred by modern consumers, are precisely the issues with which Michael Kors has struggled and is yet to satisfactorily resolve.”
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