MILAN, Italy - In a deal valued at $2.12 billion (1.61 billion pounds), the iconic Italian fashion house, Gianni Versace has been acquired by the U.S. fashion group Michael Kors.
Rumours about the acquisition of the Milan-based group have been doing the rounds for a while now, but the handbag maker was added to the mix over the weekend, after sources revealed that the company was in the running, along with the other contender, Tiffany & Co.
On Tuesday, Versace and Michael Kors issued a statement confirming the deal, which has made Versace the latest Italian brand to fall into foreign hands.
A joint statement by the companies said that Michael Kors has agreed to buy "all of Versaces outstanding shares for a total enterprise value of 1.83 billion euros, to be funded in cash, debt and shares in Michael Kors Holding Ltd."
Further, the statement noted that Michael Kors Holding Ltd will be renamed Capri Holdings Ltd inspired by an "iconic, glamorous and luxury destination" island.
Founded by Gianni Versace 40 years back, the Milan-based group, that is known for its Medusa head logo, sold 20 percent stake to the U.S. private equity group Blackstone in 2014.
Since then, the Italian brand has been considering a listing since 2014.
Currently, 80 percent of the fashion house is owned by the Versace family via a holding company called Givi.
Further, the group is being run by Donatella Versace and her brother Santo Versace since the murder of their sibling Gianni in 1997.
On Tuesday, Michael Kors and Versace announced that Blackstone will now fully exit its investment and the Versace family will receive 150 million euros of the purchase price in Capri shares.
The companies further noted in the statement that as part of the deal, Donatella Versace will stay on to oversee the label.
The statement said, "Donatella, her brother Santo and daughter Allegra will also stay on as shareholders in the company. Versace's management team will continue to be led by its CEO, Jonathan Akeroyd."
While the deal is subject to regulatory approvals, the companies said that they are expecting to close the deal in the fourth fiscal quarter.
Through the latest deal, Michael Kors has marked its entry into the high-end European luxury market, a year after it acquired the shoe brand Jimmy Choo for $1.2 billion.
While announcing the deal on Tuesday, Michael Kors said that the company hopes to reduce its proportion of business in the Americas from 66 percent to 57 percent.
It pointed out that it is planning on increasing its European business from 23 percent to 24 percent and Asian business from 11 percent to 19 percent.
Further, Michael Kors added that it plans to grow Versace to $2 billion in revenue globally and increase its retail footprint from roughly 200 to 300 stores.
The company said in a statement that it is expecting to expand accessories and footwear from 35 percent to 60 percent of revenues.
Meanwhile, Donatella said in the company's statement, "We are all very excited to join a group led by [Michael Kors CEO] 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."