Michael Kors reportedly ready to buy Versace for $2B

Versace on verge of sale to Michael Kors

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The Italian fashion house that's responsible for making those colorful silk blouses and body-hugging dresses could soon have a new parent company.

Donatella Versace, the brand's vice-president and artistic director, has called an all-staff meeting for Tuesday to announce the deal, according to the Italian newspaper Corriere della Sera.

But word that a deal is close sent Kors shares down nearly 9 per cent to as low as US$66.33 in NY on Monday, the biggest intraday drop since May 30.

Michael Kors could not immediately be reached for comment.

Models present creations at the Versace show during Milan Fashion Week earlier this month. "Would Michael Kors have what it takes to succeed in this?"

"Kors has not fully integrated the [Jimmy Choo] business", Wells Fargo analyst Ike Boruchow wrote, adding that a Versace deal is "possibly doing too much too quickly".

"While it is true that the enlarged group would be able to make savings on central costs, we don't see the addition of a brand like Versace being about helping to boost the Michael Kors brand", said Saunders.

Under the deal, private equity firm Blackstone Group will sell its current 20 percent holding, which it acquired in 2014.

The group, founded by designer Gianni Versace in 1978, boasted sales of 686 million euros in 2016 and turnover is expected to exceed one billion euros in the "short term", CEO Jonathan Akeroyd said in June. Last year, the London-based Michael Kors scooped up Jimmy Choo for $1.2 billion.

The move is in line with the US brand's ambition to aggregate various luxury brands - including fashion, shoes and accessories - under one larger group. For Hitchmough, this will allow the brand to "annex further super luxury brands" without the "taint and consumer backlash of going under a more populist high street name". "It was overpriced", a source said. No matter what happens to the Versace brand, the Versace family will be involved within the company regardless.

He added, " Versace has struggled to grow sales.

Versace declined to comment on the report.

Versace had revenue of €686m euros and returned to profit in 2017, according to figures provided by the company.

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