Summary
Michael Kors acquires the Italian fashion company Versace for a total enterprise value of 1.83 billion euros or approximately $2.12 billion.
Versace's revenue for 2017 was $786 million and EBITDA was about $52.5 million. The only external shareholder of the company is Blackstone with a 20% stake.
This acquisition opens up a huge number of opportunities for Michael Kors due to synergistic effect and expansion to the Asian markets.
Currently, Michael Kors shares are strongly oversold, and that, with an undervaluation to competitors from the luxury market, provides an opportunity to purchase the company's shares at a very good price.
On the morning of September 25, there was news that Michael Kors (KORS) acquired the Italian fashion company Versace for a total enterprise value of 1.83 billion euros or approximately $2.12 billion. Michael Kors, in turn, after the transaction will be renamed Capri Holdings Limited (CPRI). This acquisition will allow the company to diversify its portfolio of luxury assets, as well as increase the share of sales in Asia and bring additional synergies. In 2017, Michael Kors completed the acquisition of the Jimmy Choo brand for $1.2 billion, after the announcement of the deal, the company's shares added more than 20%, while after the news about the purchase of Versace, company's shares fell by almost 9%.
The financial condition of the company allows for such an acquisition, and the current oversold situation and undervaluation to competitors from the luxury market provide an opportunity to purchase the company's shares at a very good price.
