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Michael Kors buys Versace in $2.1bn deal Michael Kors buys Versace in $2.1bn deal
(about 3 hours later)
Michael Kors has confirmed its acquisition of the Italian fashion house Versace for $2.1 bn (£1.6bn). Versace has been sold to US clothing and handbags group Michael Kors for $2.1bn (£1.64bn) in the latest example of a family-owned European brand taken under the control of a global fashion conglomerate.
Donatella Versace, the brand’s artistic director and sister of founder Gianni Versace, will continue to lead the creative side of the business. Michael Kors, which last year bought London shoemaker Jimmy Choo for almost £900m, confirmed on Tuesday that it had bought Versace and would fold all three brands into a new company called Capri Holdings – named after the favourite holiday island of wealthy fashionistas.
Versace boss Jonathan Akeroyd will also remain in place with the rest of the brand’s senior management. The deal will cement the fortunes of the heirs of Gianni Versace, the designer who founded the label 40 years ago and built its reputation by dressing some of the world’s most glamorous women, including Princess Diana, Demi Moore and Elizabeth Hurley.
Michael Kors will be renamed Capri Holdings. The enlarged company will comprise of three global fashion brands: Michael Kors, Versace and Jimmy Choo. The family owns 80% of the business, with Gianni Versace’s niece Allegra Versace Beck, 32, holding a 40% stake worth €732m (£654m). Allegra’s mother and Gianni’s sister, Donatella Versace, holding 16%, and Gianni’s older brother Santo owning 24%.
Donatella Versace, her brother Santo and daughter Allegra will become shareholders in Capri Holdings. The family, who inherited the company after the murder of Versace outside his Miami mansion in 1997, will maintain a €150m stake in Capri Holdings. US private equity firm Blackstone, which bought 20% of Versace in 2014, will sell all of its holding.
John D Idol, the Michael Kors chief executive and chairman, said the company was committed to investing in Versace’s growth, with a goal to grow revenues to over $2bn (£1.5bn). Donatella Versace, 63, who is Versace’s vice-president and artistic director, has committed to stay on at Capri Holdings and “lead the company’s creative vision”.
“We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth,” he said. “This is a very exciting moment for Versace,” she said. “It has been more than 20 years since I took over the company along with my brother Santo and daughter Allegra. I am proud that Versace remains very strong in both fashion and modern culture. Versace is not only synonymous with its iconic and unmistakable style, but with being inclusive and embracing of diversity, as well as empowering people to express themselves.”
Versace said: “We believe that being part of this group is essential to Versace’s longterm 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.” She said the family believed that Versace had to be sold in order for the brand to “reach its full potential”. “We believe that being part of this group is essential to Versace’s long-term success,” she said. “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.”
Michael Kors acquired the shoe brand Jimmy Choo last year in a deal worth £896m. The move has already had a positive effect on the group’s earnings. John Idol, chairman and chief executive of Michael Kors, said buying Versace was an important milestone for the US company and that creating a “family of luxury brands” would deliver shareholders “multiple years of revenue and earnings [profits] growth”.
Michael Kors also outlined plans to increase the number of Versace retail stores worldwide from 200 to 300 and push the share of revenues raised from accessories and footwear from 35% to 60%. Michael Kors, which was founded by its namesake designer in 1981, is closing more than 100 stores and streamlining its products to reposition the brand as a more luxurious label. Kors is a minority shareholder of Michael Kors Holdings with US investment firms holding the largest stakes.
The sale of Versace marks a turning point in the brand’s history. Founded in 1978, it has been majority-owned by members of the Versace family since its inception. “For over 40 years, Versace has represented the epitome of Italian fashion luxury, a testament to the brand’s timeless heritage,” Idol said. “With the full resources of our group, we believe that Versace will grow to [sales of] over $2bn [up from $509m in 2016, the latest year available].
At the time of founder Gianni Versace’s death in 1997, the company had been making plans for a listing on the New York Stock Exchange, but it has remained private ever since. “We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth.” The company said it would increase the number of Versace shops from 200 to 300, and would increase the share of revenue raised from accessories and footwear from 35% to 60%.
Rumours of an IPO or sale resurfaced in the years following the company’s sale of a 20% stake to private equity giant Blackstone in 2014. Idol said Donatella Versace’s “iconic style” would remain at the heart of Versace’s design aesthetic.
In 2016, former Alexander McQueen boss Akeroyd was named chief executive of Versace to oversee “the next phase of Versace’s development”. However, fans of Versace took to Instagram and Twitter to implore the family to reconsider and not sell the brand. “Don’t let MKors buy any % of Versace. He will ruin it. He will kill it,” one person commented on Versace’s official Instagram account.
Green Carpet beauties - @annaewers and @cindycrawford take on #TheGreenCarpetChallenge in #AtelierVersace looks with lead-free advanced @Swarovski crystals. Discover more at the link in bio. _ #GCFAitalia hosted by @cameramoda in collaboration with @ecoage.
A post shared by Versace (@versace) on Sep 24, 2018 at 9:56am PDT
“You sell off your heritage and Gianni’s memory for decadent money. I really hope you don’t, but if it’s so, I will never buy from you anymore,” another person wrote.
"Michael Kors is reportedly set to buy Versace for $2 billion this week" Gianni Versace sweetie, I’m so sorry
Donatella Versace said the company’s decision to become shareholders in Capri Holdings “demonstrates our belief in the long-term success of Versace and commitment to this new global fashion luxury group.”
The takeover of Versace follows the sale of several other independent high-end brands to large conglomerates. Dior was sold to French group Moët Hennessy Louis Vuitton (LVMH), which owns Louis Vuitton, for $13bn last year. French billionaire François-Henri Pinault’s Kering group assumed full control of Gucci in 2004 and also owns Yves Saint Laurent, Balenciaga, Alexander McQueen and Bottega Veneta.
This summer Italy’s Missoni family sold a 41% stake in the eponymous brand to a private equity venture backed by the Italian state for €70m, and Belgian designer Dries Van Noten sold a majority stake to Spanish luxury group Puig.
Chanel is the last major European luxury brand to remain in private hands. The company is owned by brothers Alain and Gérard Wertheimer, grandsons of Pierre Wertheimer an early business partner of Gabrielle Bonheur “Coco” Chanel.
Michael Kors said the Capri Holdings name was “inspired by the fabled island which has long been recognised as an iconic, glamorous and luxury destinations”. It said the island’s Faraglioni three-rock formations that juts out from the island’s coast would act as a symbol of the “timeless heritage and strong foundation that is at the core pf each of the three founder-led brands in our global fashion luxury group”.
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