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Image: Versace

Following rumors that Versace has been readying for a sale, Michael Kors is the buyer. The American fashion giant announced a $2.12 billion deal to buy the Milan-based fashion house on Tuesday. Following the close of the acquisition, the larger corporate entity, Michael Kors Holdings, (as distinct from the brand, itself) will change its name to Capri Holdings, inspired by the “iconic, glamorous and luxury destination” island.

Kors said on Tuesday that it plans to grow Versace, the design house founded by the late Gianni Versace in 1978 and one of the final few major fashion houses to operate independently, to $2 billion in revenue globally and increase its retail footprint from roughly 200 to 300 stores. It also expects to expand accessories and footwear from 35 percent to 60 percent of revenues. 

John D. Idol, Chairman and Chief Executive Officer of Michael Kors Holdings Limited, said, “Versace’s management team will continue to be led by Chief Executive Officer, Jonathan Akeroyd, who has been an instrumental partner to Donatella in driving growth and success for Versace worldwide.”

Moreover, Donatella Versace confirmed that she, her brother Santo, and her daughter Allegra “will become shareholders in Capri Holdings Limited. This demonstrates our belief in the long-term success of Versace and commitment to this new global fashion luxury group.”

The deal is the latest in a string of acquisitions of independently-held brands. For instance, Missoni recently announced that after 60-plus years of operating as a family-owned business, it has entered into a agreement to sell a minority stake of its eponymous brand to a private equity venture backed by the Italian state, while Dries Van Noten sold a majority stake to Spanish luxury group Puig in June.

Such acquisitions come as a result of “the consolidation of power in the fashion industry in the hands of luxury firms, such as LVMH and Kering, [which] has made it increasingly difficult for smaller brands to compete for a viable market share,”  the Guardian wrote this weekend.

New York-based Michael Kors — which is best known for the China-made “accessible luxury” goods in its MICHAEL Michael Kors offshoot and whose December 2011 initial public offering on the New York Stock Exchange valued it at nearly $3.63 billion — acquired Jimmy Choo last year for a cool $1.2 billion. That acquisition is said to be part of a larger expansion effort, in which Kors is seeking to buy up brands in order to create an American rival to European luxury conglomerates, like LVMH, Kering and Richemont.

As CNBC reported on Tuesday, “The deal marks one of the first times an American company has cracked the code of super high-end luxury fashion, typically controlled by LVMH, the owner of Guerlain and Givenchy, and Kering, the owner of Balenciaga and Yves Saint Laurent.”