Michael Kors makes high-end fashion statement with $2.2 billion Versace buy

by:GF bags     2019-09-01
MILAN (Reuters)-
Michael Kors KORS.
N agreed to buy luxury designer Versace for £ 1.
83 billion euros (1.
67 billion)
Including Tuesday\'s debt because of the U. S.
The fashion group is positioned to compete with European competitors.
Michael Coles, whose label of the same name is known for its leather handbags, makes no secret of his ambition to expand his customer base and high-end portfolio
End brand after buying British high heels
Jimmy Choo, the heel maker, costs $1.
2 billion last year.
The bet on Versace comes in the United StatesS.
The group wants to refresh the market image of the Michael Kors brand, and restore some pricing capabilities.
The move is also aimed at reviving Versace ). Versace achieved net profit last year.
This is the latest in a string of foreign acquisitions of Italian luxury brands in recent years. Milan-
Headquartered in Versace, known for its bold design and Medusa head logo, it is one of a group of family members
At a time when the luxury industry is in strong demand for China, the Italian brand owned is considered an attractive target.
\"With the acquisition of Versace, we have created one of the world\'s leading fashion and luxury groups,\" said John Idol, Chairman and CEO of Michael Kors Holdings . \".
Michael Kors has agreed to purchase all outstanding shares of Versace at the total corporate value of 1.
83 billion euros ($2. 2 billion)
Funded by cash, debt and shares of Michael Coles Holdings Limited, the company will be renamed Capri Holdings Limited
Idol later ruled out the possibility of further acquisition by Capri, which will focus on the development of these three brands.
A person familiar with the matter said the talks started before the summer, when Versace was being watched by some investors as Blackstone planned to withdraw from the group. The U. S.
According to Reuters, private equity companies that bought 20% of Versace\'s equity in 2014 for 0. 21 billion euros will receive 0. 156 billion euros in capital gains by withdrawing from investment.
The Versace family with a 80% stake in Milan-
Capri, which is based in fashion house, will receive a purchase price of 0. 15 billion euros.
\"We believe that being part of this group is critical to Versace\'s long-term development. term success.
My passion has never been as strong as it is now, \"said Donatella Versace, the late founder\'s sister, artistic director and deputy director. president.
Idol added that Jonathan Akroyd, CEO of Versace, will continue to run the company, while Donatella Versace will \"continue to lead the company\'s creative vision \".
With regulatory approval, the deal is expected to be completed in the fourth quarter.
Advisers include JPMorgan Chase and Barclays.
Emerging enterprise groups like Michael Kors have been trying to enter an industry dominated by European companies such as Louis Vuitton --owner LVMH (LVMH. PA)and Kering (PRTP. PA).
\"The Versace brand has strong global growth potential and is not yet developed in all regions, especially Asia and North America,\" Cowen analysts said in a report . \".
Idol said the group plans to increase Versace\'s global sales to $2 billion, achieve profit margins within the \"high teens\" range, open about 100 new stores and increase online
It also plans to increase its share.
Profit margins for accessories and footwear rose from 60% to 35%.
\"Versace is very backward. developed.
\"With Capri\'s resources behind them, this will change,\" Idol added in a phone call with analysts . \" He explained that the group\'s runway line will remain the main
He acknowledged that the brand is more influential than its customer base and that \"we need to convert these metrics \".
Versace did not disclose the financial details, but the documents submitted showed that 2017 of sales were 0. 668 billion euros, and interest, taxes, depreciation and pre-amortization earnings (EBITDA)
45 million euros. “(In luxury)
Americans are the opposite of Italians: Although their products are not good, they (excellent)
Their attitude towards the market.
The only risk is that they don\'t give the product the value it deserves, \"said Giuliano noch, a professor at the School of Management at Milan Polytechnic University.
Shares in Michael Kors are trading.
Greenwich Time rose 4% at 1655 points, down more than 8% when trading news emerged on Monday.
Versace is the latest-in-
Italian name acquired by a foreign company. Rome-
LVMH acquired Fendi, Bulgari, a well-known jeweler, and Loro Piana, a cashmere manufacturer.
Gucci is the biggest brand of Kering and also Bottega Veneta and men\'s brand Brioni.
On social media, fans are concerned that the most popular brands on the red carpet are losing their appeal, while Italian politicians mourn the loss of another Italian brand.
\"I am a liberal, but I am tired of seeing foreigners buy the best Italian brands in fashion, food and technology,\" said Italian Interior Minister Matteo Salvini . \". ($1 = 0. 8495 euros)
Assistance. (USD 1 = EUR 0. 8495)
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