Michael Kors set to snap up Italy's Versace: sources

LONDON (Reuters) - U.S. fashion group Michael Kors has agreed to take control of Versace in a deal that could value one of Italy’s most prized designers at $2 billion, sources familiar with the matter said on Monday.

Budding luxury conglomerates, including Michael Kors’ U.S. rival Tapestry, owner of Coach and Kate Spade, are trying to make in-roads into an industry still dominated by European players such as Louis Vuitton owner LVMH.

Michael Kors, whose namesake label is best known for its leather handbags, has made no secret of its ambition to grow its portfolio of high-end brands after buying British stiletto-heel maker Jimmy Choo for $1.2 billion last year.

Versace, known for its bold and glamorous designs and its Medusa head logo, is one of a clutch of family-owned Italian brands cited as attractive targets at a time when the luxury industry is riding high on strong demand from China.

The move is in line with the U.S. brand’s ambition to aggregate various luxury brands - including fashion, shoes and accessories - under one larger group.

The deal - which is expected to be announced imminently - will give Michael Kors a mega-brand and red carpet favorite that is among the most recognizable and followed fashion labels in the world.

Two of the three sources who spoke to Reuters said the company had agreed to pay a large premium for Versace.

Michael Kors could not be reached for comment. Versace declined to comment.

Donatella Versace, sister of late founder Gianni who doubles as artistic director and vice-president of the Milan-based group, has called a staff meeting for Tuesday, according to a person who was briefed by a company employee.

The Italian fashion icon has been considering a market listing after U.S. private equity group Blackstone bought a 20 percent stake in 2014 to fund overseas expansion, although Chief Executive Jonathan Akeroyd told Reuters earlier this year there was no rush for an IPO.

French fashion houses including Paris-based Kering (PRTP.PA) were among those holding talks with the Versace family, the sources said, but considered the price too expensive.

“They didn’t feel the need to invest so much money into another Italian fashion brand. It was overpriced,” the source said.

Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show that last year it posted sales of 668 million euros ($786 million) and earnings before interest, tax, depreciation and appreciation (EBITDA) of 44.6 million euros.

Since Akeroyd’s appointment in 2016, Versace has been working on streamlining its management structure, cutting costs and pushing to increase sales online.

Last year it returned to a net profit of just under 15 million euros compared with a net loss of 7.9 million euros the previous year.