Is Michael Kors Close to Acquiring Versace?

MILAN — Speculation that Versace is in M&A play has been rife during Milan Fashion Week, reaching a fever pitch on Sunday.

The company had no comment on a possible divestiture by the Versace family, and the likelihood of a transaction could not immediately be learned. However, multiple sources contended that a deal could be clinched as early as this week.

French luxury giants LVMH Moët Hennessy Louis Vuitton and Kering, and American groups including PVH Corp., Michael Kors Holding Ltd. and Tapestry Inc., are all believed to have looked at Versace as an acquisition target in recent months. (A spokesperson for Tapestry declined to comment.) Sources said the deal could involve a group of American investors working with a strategic partner.

During a conference call this year, Manny Chirico, chairman and CEO of PVH, reiterated its potential appetite.

“Obviously, given the strengthening dollar, buying international assets like taking back licensing businesses internationally or looking at potential brand acquisitions outside the United States, given the strengthening dollar compared to where it was two or three years ago, it becomes more attractive on that level,” he said.

John D. Idol, CEO of Kors, has made no secret of his desire to build the firm’s portfolio, and he has said publicly that he is on the hunt for more acquisitions. The company sees itself as a global luxury company. Its latest buy the $1.2 billion deal for the Jimmy Choo brand in 2017. Adding Versace to the Kors umbrella would fit perfectly with the push to intensify its focus on high-end luxury.

At the time of the Choo deal, Idol said: “We are creating a global luxury fashion group. Our focus is on international fashion luxury that are industry leaders.” The executive noted that having the two together under one umbrella helps the firm diversify from a brand and product standpoint, as well as geographically with greater exposure in Asia and Europe. A Kors U.S. spokeswoman declined comment.

New York-based Blackstone Group acquired 20 percent of Versace in 2014 in a deal that, at the time, valued the Milan-based company at around 1 billion euros ($1.18 billion). The remaining shares are in the hands of siblings Donatella and Santo Versace and the creative director’s daughter Allegra Versace Beck. It is understood an offer for Versace now values the company at around double that 2014 valuation.

Donatella Versace paraded her spring ’19 collection here on Friday night, exalting the brand’s reputation for fierce and sexy fashions in a measured way.

Speaking about the future from Blackstone’s point of view, sources contend the group could be looking for an exit over the next few months given most private investors’ three- to five-year timeframes and that selling to another private equity fund is unlikely. The idea of an initial public offering was floated shortly after Blackstone’s investment, and former CEO Gian Giacomo Ferraris started setting the wheels in motion for a possible IPO in 2015, but it was shelved and never materialized. Ferraris was tapped in 2009 to restructure the company, and in 2010, the company swung back to profit ahead of the 2011 date that had been forecast, and started setting its expansion. Former Alexander McQueen CEO Jonathan Akeroyd succeeded Ferraris in 2016 and navigated through months of chatter as Riccardo Tisci and then Kim Jones were said to be joining the company, although neither deal ever took place.

In June, Akeroyd told WWD that after a string of investments that had pushed the company into the red, he saw improvements, with a 4 percent growth in retail and sales totaling 686 million euros, in line with the previous year, when they reached 669 million euros. The company once more returned to the black as net profit reached 15 million euros, compared with a loss of 7.4 million euros in 2016. Akeroyd underscored the brand’s “great momentum” following Donatella Versace’s successful run of collections, including her tribute to her late brother Gianni in September last year. Asked about possible challenges ahead, the executive said at the time that he was working on concentrating on making the brand’s European and American business as strong as it is in Asia, “and we are on the right way to achieving that.”

Multiple sources have over the years concurred that the Versace family is deeply committed to the company, has great ambitions for it and feels the responsibility to grow it in the wake of Gianni Versace’s murder in 1997. His niece Allegra Versace Beck inherited 50 percent of the company, and his sister and his brother Santo have a 20 and 30 percent stake, respectively.

With contributions from Vicki M. Young.

This story was reported by WWD and originally appeared on WWD.com.

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