The brand has been at its most prominent in years since a hit show in September 2017 brought back the most iconic looks from founder Gianni's 1990s collections and designer Donatella Versace co-hosted New York's Met Gala in May, dressing such pop culture icons as Gigi Hadid and Kim Kardashian.
Versace was one of the few Italian fashion companies to remain independent, until now.
His sister, Donatella Versace, took over creative direction, while his brother Santo continued on the business side.
The takeover was "essential to Versace's long-term success", Donatella Versace, artistic director and vice-president of Versace said.
Mr Kors said: "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".
Versace chief executive Jonathan Akeroyd, who is also staying on, said Tuesday that since joining the company two years ago, "focus has been on leveraging the company's heritage and strong brand recognition worldwide", in turn helping "to experience significant growth in all regions". The brand is known for its opulent, glamorous designs that are always in heavy rotation on celebs.
Shares in New York-listed Michael Kors, which past year acquired show brand Jimmy Choo for £896million, fell by more than 8 per cent on the rumours yesterday.
"This is a very exciting moment for Versace", the designer said in a statement.
However, giving Versace fresh impetus may not be easy as luxury groups struggle to swiftly adapt to the fast and fickle taste of an increasingly younger customer base, analysts said.
The deal is expected to close in the fiscal fourth quarter.
It's official: Michael Kors is buying Versace. Shares of Michael Kors fell more than 8 per cent after news reports of the deal first surfaced.
Launched in 1981, Michael Kors is named after its United States founder, the NY designer with an avid celebrity following who has dressed the likes of Melania Trump and Michelle Obama.
Still, Saunders said there was a "lot of work to be done" to boost Versace sales.