Michael Kors owner buys Versace for more than $2B

Michael Kors Holdings Limited has acquired Versace for $2.12B (USD) and changed its name to Capri Holdings Limited. Versace’s new owners intend to build the Versace brand to $2.0 billion in revenues, while growing Jimmy Choo, which it bought last year for $1.2B, to $1.0B in revenues and Michael Kors to $5.0B in revenues. It is also seeking to rely less on sales from the Americas, moving American continent geography sales from 66 percent to 57 percent, and push Asia sales higher, from the current 11 percent of sales to 19 percent of sales.

Reports had surfaced that the affordable luxury company was making a move to upscale its portfolio and acquire Versace, the famed luxury brand. According to Wall Street Journal reporting, investors have not been too keen on the transaction, with Capri Holdings paying more three times sales for Versace, while it is itself challenged to increase its own enterprise value. Versus EBITDA, Capri Holdings trades lower than competitors LVMH Moët Hennessy Louis Vuitton SE and Kering, Gucci’s owner.

Michael Kors owner buys Versace for more than $2B
The owner of Michael Kors intends to build Versace into a $2.0B brand.

Versace is known for a provocative designs and the high-profile assassination of Gianni Versace, its founder, in 1997, notes The Journal.

“Versace has long been recognized as one of the world’s leading fashion luxury houses, and is synonymous with Italian glamour and style,” said John D. Idol, in a statement. “We are thrilled that the house of Versace is now part of the Capri Holdings family of luxury brands.”

The Versace acquisition was funded through cash on hand, a revolving credit facility, and bank term loans. The Versace family reinvested Euro $150M ($172.5M USD) of the cash received in proeeds for shares of Capri Holdings concurrent with the transaction. Capri Holdings is named after a fabled island with a three-rock formation that represents “timeless heritage and strong foundation” said Idol.

View the Capri Holdings investor presentation here.

Sources: Business Wire, Wall Street Journal

Photo credit: Capri Holdings

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