Michael Kors has agreed to buy the Italian fashion house Versace in a deal that has an enterprise value of 1.83 billion euros ($2.12 billion). The global fashion luxury group also announced it will change its name to Capri Holdings.
“We are excited to have Versace as part of our family of luxury brands, and we are committed to investing in its growth,” Michael Kors Chairman and CEO John Idol said in the press release.
“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,” he added.
Michael Kors says as part of its long-term strategy it will aim to grow Versace to $2 billion of revenue globally while expanding its retail footprint to 300 stores from 200. It also hopes to build out Versace’s e-commerce and omni-channel development.
As part of its broader strategy, Michael Kors says the acquisition of Versace will help it get to $8 billion of revenue over the long term. The luxury fashion group says the deal will help it diversify its geographic portfolio from 66% Americas to 57% Americas; from 23% Europe to 24% Europe; and from 11% Asia to 19% Asia.
Michael Kors says it expects the acquisition to be “dilutive to earnings per share in the high-single digits in fiscal 2020, accretive in the low-single digits in fiscal 2021, and accretive in the high-single digits in fiscal 2022.”
Michael Kors will trade under the Capri name once the deal closes, with the ticker ‘CPRI.’ Shares are little changed following the announcement after falling more than 8% amid speculation of a deal on Monday. They are up 6% this year.