Versace acquired by Michael Kors Holding

Michael Kors Holdings agreed on 25 September 2018 to acquire the whole of Gianni Versace from the Versace family, which held 80%, and from Blackstone, at an enterprise value of €1–10bn, representing an EV/EBITDA multiple of Above 20x and an EV/revenue multiple of 1x–3x. The family received 150 million euros of the consideration in shares of the acquirer, the balance being settled in cash drawn from the balance sheet, an existing revolving facility and underwritten term loans arranged by JPMorgan and Barclays. Completion was expected during the fourth fiscal quarter. Founded in 1978 in Milan, Gianni Versace designs, manufactures and distributes haute couture, ready-to-wear, accessories, jewellery, watches, eyewear, fragrances and home furnishings under the Medusa emblem, trading through more than two hundred boutiques alongside wholesale accounts and licences. Revenue amounted to €450–900M with an EBITDA of €50–100M, against c.670 million and c.45 million respectively in 2017. Its own stores generated 64% of sales, wholesale 29% and royalties the remainder, while Asia accounted for half of revenue against 19% for North America. The multiple exceeded the levels at which the acquirer’s own shares traded, at roughly twice its sales, and European luxury groups that had examined the business had judged the price excessive. The acquirer’s shares fell 8.2% on announcement, a decline equivalent to around 40% of the price paid. Profitability rather than scale explained that gap, the house having recorded a pre-tax loss in 2016 and net profit of 15 million euros in 2017, while its accessories represented 41% of sales against the higher proportions that generate margin at comparable houses, and its marketing expenditure stood near 5% of revenue against three times that at the largest French houses. Blackstone sold after roughly four years, having acquired its minority holding in 2014. Donatella Versace continued to direct the creative work and Jonathan Akeroyd remained chief executive, while the family, including Santo and Allegra Versace, became shareholders of the acquiring group.

In the past, Versace was acquired by Blackstone in 2014 as part of its expansion strategy.