Michael Kors Is Close to Buying Versace for $2 Billion

Versace on verge of sale to Michael Kors

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He's not buying a new baroque-inspired coat or redecorating his home with Versace's home collection, but may be buying the entire company for a cool $2 billion, aka the same cost as 493,827 limited edition Palazzo Empire bags.

The legendary fashion house of Versace is about to be sold to a USA company for $2 billion, according to Italy's biggest newspaper, Corierra della Sera.

Donatella Versace and her brother Santo Versace have helped run the company since their brother Gianni's murder in 1997.

The leader of the pack is every mom's favorite handbag maker, Kors.

Sources told the newspaper the official announcement from Milan would come Tuesday, when creative director Donatella Versace has scheduled a staff meeting, but that confirmation of the news could come within hours.

A spokesperson for Michael Kors did not immediately comment on the reports.

Two of the three sources who spoke to Reuters said the company had agreed to pay a large premium for Versace, known for its Medusa head logo.

Four years ago it sold a 20% stake to U.S. private equity group Blackstone. "Would Michael Kors have what it takes to succeed in this? They needed a buyer who could make heavy investments".

Kors, whose shares are listed in NY, alarmed investors earlier this year when it reported a decline in retail sales under its main brand in the Americas, even as the smaller European and Asian markets fared better. While talks are advanced, no final agreements have been reached, the people said.

Blackstone, whose stake acquisition valued Versace at US$1.4 billion in 2014, declined to comment.

"They didn't feel the need to invest so much money into another Italian fashion brand".

She holds a 20 per cent stake in the company, her daughter Allegra has a 50 per cent stake, while Santo, Donatella's brother, holds the remaining 30 per cent.

Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show the Milan-based group past year posted sales of €668 million ($1 billion Cdn) and earnings before interest, tax, depreciation and appreciation (EBITDA) of €44.6 million ($67.7 million Cdn).

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