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Michael Kors to acquire Versace; to be renamed Capri

Sep '18
L-R: Jonathan Akeroyd, Donatella Versace, John D Idol. Courtesy: Rahi Rezvani
L-R: Jonathan Akeroyd, Donatella Versace, John D Idol. Courtesy: Rahi Rezvani
Michael Kors Holdings Limited, a global fashion luxury group, has signed a definitive agreement to acquire all of the outstanding shares of Italian luxury fashion house Gianni Versace S.p.A. for a total enterprise value of €1.83 billion ($2.12 billion). Upon the closing of the acquisition, Michael Kors will adopt the new name of Capri Holdings Limited.

Versace, long recognised as one of the world’s leading luxury fashion companies, is synonymous with Italian glamour and style.

As part of its strategic plan for the long-term growth of Versace, Michael Kors intends to build on Versace’s luxury runway momentum and grow Versace to $2.0 billion in revenues globally. It will increase Versace’s global retail footprint from approximately 200 to 300 stores, accelerate e-commerce and omni-channel development, and expand men’s and women’s accessories and footwear from 35 per cent to 60 per cent of revenues, Michael Kors said in a press release.

The acquisition of Versace is expected to deliver a number of benefits to Michael Kors, including opportunity to help grow the group’s revenues to $8 billion in the long-term, and diversify its geographic portfolio, with potential to create long-term operational synergies.

The transaction is not subject to a financing condition. The cash portion of the purchase price is expected to be funded by a combination of cash on hand, drawings under the company’s existing revolving credit facility, and committed underwritten bank term loans from advisors JPMorgan Chase Bank, N.A. and Barclays. The Versace family will also receive €150 million of the purchase price in shares of Capri Holdings Limited.

“The acquisition of Versace is an important milestone for our group. Versace was founded in 1978… With the full resources of our group, we believe that Versace will grow to over $2.0 billion in revenues. 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,” said John D Idol, chairman and chief executive officer of Michael Kors.

“This is a very exciting moment for Versace,” said Donatella Versace, who will continue to lead the company’s creative vision. “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… 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.”

Santo, Allegra and Donatella will become shareholders in Capri Holdings Limited, the new name to be adopted by Michael Kors Holdings Limited upon the closing of the acquisition. Versace’s management team will continue to be led by chief executive officer Jonathan Akeroyd.

The transaction is expected to close in the fourth fiscal quarter, subject to specified closing conditions, including the receipt of required regulatory approvals. (RKS)

Fibre2Fashion News Desk – India

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