Expanding Global Fashion Luxury Group with Acquisition of Versace
LONDON-Tuesday 25 September 2018 [ AETOS Wire ]
(BUSINESS
WIRE)-- Michael Kors Holdings Limited (NYSE:KORS), a global fashion
luxury group, announced today that a definitive agreement has been
signed to acquire all of the outstanding shares of Italian luxury
fashion house Gianni Versace S.p.A. for a total enterprise value of Euro
1.83 billion or approximately US$2.12 billion. Versace, long recognized
as one of the world’s leading luxury fashion companies, is synonymous
with Italian glamour and style.
John
D. Idol, Chairman and Chief Executive Officer of Michael Kors Holdings
Limited, said, “The acquisition of Versace is an important milestone for
our group. Versace was founded in 1978. For over 40 years, Versace has
represented the epitome of Italian fashion luxury, a testament to the
brand’s timeless heritage. We are excited to have Versace as part of our
family of luxury brands, and we are committed to investing in its
growth. With the full resources of our group, we believe that Versace
will grow to over US$2.0 billion in revenues. We believe that the
strength of the Michael Kors and Jimmy Choo brands, and the acquisition
of Versace, position us to deliver multiple years of revenue and
earnings growth.”
Mr.
Idol continued, “Donatella’s iconic style is at the heart of the design
aesthetic of Versace. She will continue to lead the company’s creative
vision. I am thrilled to have the opportunity to work with Donatella on
Versace’s next chapter of growth.”
“This
is a very exciting moment for Versace,” said Donatella Versace. “It has
been more than 20 years since I took over the company along with my
brother Santo and daughter Allegra. I am proud that Versace remains very
strong in both fashion and modern culture. Versace is not only
synonymous with its iconic and unmistakable style, but with being
inclusive and embracing of diversity, as well as empowering people to
express themselves. Santo, Allegra and I recognize that this next step
will allow Versace to reach its full potential. We are all very excited
to join a group led by John Idol, whom I have always admired as a
visionary as well as a strong and passionate leader. We believe that
being part of this group is essential to Versace’s long-term success. My
passion has never been stronger. This is the perfect time for our
company, which puts creativity and innovation at the core of all of its
actions, to grow.”
Donatella
added, “Santo, Allegra and I 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.”
“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,” added John D. Idol.
“He and Donatella have assembled strong senior management and design
teams that will continue to lead Versace into its next chapter. We are
extremely fortunate to be able to acquire such an extraordinary brand
with an incredibly talented team.”
Jonathan
Akeroyd, Chief Executive Officer of Versace, said, “Since I joined
Versace over two years ago, our focus has been on leveraging the
company’s heritage and strong brand recognition worldwide, which has
allowed us to experience significant growth in all regions. Donatella’s
unmatched vision has led to the continued and growing success of our
brand. I am thrilled to be joining Capri Holdings Limited, which will be
instrumental in accelerating our growth globally.”
Strategic Initiatives and Transaction Rationale
As part of our strategic plan for the long-term growth of Versace, we intend to execute on the following key initiatives:
Grow Versace to US$2.0 billion in revenues globally
Build on Versace’s luxury runway momentum
Enhance Versace’s powerful and iconic marketing
Increase global retail footprint from approximately 200 to 300 stores
Accelerate e-commerce and omni-channel development
Expand men’s and women’s accessories and footwear from 35% to 60% of revenues
The acquisition of Versace is expected to deliver a number of benefits for our Company, including:
Opportunity to help grow our group’s revenues to US$8.0 billion in the long-term
Expand
our global luxury group to include three iconic founder-led brands
defined by fashion luxury products with a reputation for world-class
design and innovation
Diversify our geographic portfolio from:
66% Americas to 57% Americas
23% Europe to 24% Europe
11% Asia to 19% Asia
Potential to create long-term operational synergies
Transaction Details
The
transaction is not subject to a financing condition. The cash portion
of the purchase price is expected to be funded by a combination of cash
on hand, drawings under the company’s existing revolving credit
facility, and committed underwritten bank term loans from our advisors
JPMorgan Chase Bank, N.A. and Barclays. The Versace family will also
receive Euro 150 million of the purchase price in shares of Capri
Holdings Limited. The transaction is expected to close in the company’s
fourth fiscal quarter, subject to specified closing conditions,
including the receipt of required regulatory approvals.
Our New Name
Capri
Holdings Limited (NYSE:CPRI) is the new name to be adopted by Michael
Kors Holdings Limited upon the closing of the acquisition. Our name is
inspired by the fabled island which has long been recognized as an
iconic, glamorous and luxury destination. The island’s spectacular three
rock formation, formed over 200 million years ago, is symbolic of the
timeless heritage and strong foundation that is at the core of each of
the three founder-led brands in our global fashion luxury group.
Financial Considerations
The
company believes that the acquisition of Versace enhances the company’s
economic value and will drive improved long-term shareholder value by
accelerating long-term revenue and EPS growth potential. On a non-GAAP
basis the acquisition is expected to be dilutive to earnings per share
in the high-single digits in fiscal 2020, accretive in the low-single
digits in fiscal 2021, and accretive in the high-single digits in fiscal
2022.
Conference Call and Additional Information
The
company will host a conference call to discuss the transaction at 8:45
a.m. ET today, September 25, 2018. Participants may dial 1-800-289-0438
or 1-323-794-2423, conference ID: 9704344. A live webcast of the
conference call will also be available on the investor relations portion
of the Michael Kors Holdings Limited website,
www.investors.michaelkors.com. A replay of today’s call will be
available through October 2, 2018 by dialing 1-844-512-2921 or
1-412-317-6671, conference ID: 9704344. For additional information
concerning the transaction, please see the investor presentation
available on the Investor Relations page of the Michael Kors Holdings
Limited website at www.investors.michaelkors.com. For the avoidance of
doubt, the contents of this website are not incorporated into and do not
form part of this press release.
About Michael Kors Holdings Limited
Michael
Kors Holdings Limited is a global fashion luxury group, consisting of
iconic brands that are industry leaders in design, style and
craftsmanship. Its brands cover the full spectrum of fashion luxury
categories including women’s and men’s accessories, footwear and
ready-to-wear as well as wearable technology, watches, jewelry, eyewear
and a full line of fragrance products. The company’s goal is to continue
to extend the global reach of its brands while ensuring that they
maintain their independence and exclusive DNA. Michael Kors Holdings
Limited is publicly listed on the New York Stock Exchange under the
ticker KORS.
About Versace
Founded
in 1978 in Milan, Versace is one of the leading international fashion
design houses and a symbol of Italian luxury worldwide. It designs,
manufactures, distributes and retails fashion and lifestyle products
including haute couture, prèt-à-porter, accessories, jewelry, watches,
eyewear, fragrances, and home furnishings all bearing the distinctive
Medusa logo. The Versace group distributes its products through a
worldwide distribution network which includes over 200 boutiques in some
of the world’s most glamourous cities.
Forward-Looking Statements
This
press release contains statements which are, or may be deemed to be,
“forward-looking statements.” Forward-looking statements are prospective
in nature and are not based on historical facts, but rather on current
expectations and projections of the management of Michael Kors Holdings
Limited (the “Company”) and Gianni Versace S.p.A (“Versace”) about
future events, and are therefore subject to risks and uncertainties
which could cause actual results to differ materially from the future
results expressed or implied by the forward-looking statements. The
forward-looking statements contained in this press release include
statements relating to the expected effects of the acquisition on the
Company and Versace, the expected timing and scope of the acquisition
and other statements other than historical facts. All statements other
than statements of historical facts included in this press release may
be forward-looking statements. Without limitation, any statements
preceded or followed by or that include the words “targets”, “plans”,
“believes”, “expects”, “aims”, “intends”, “will”, “should”, “could”,
“would”, “may”, “anticipates”, “estimates”, “synergy”, “cost-saving”,
“projects”, “goal”, “strategy”, “budget”, “forecast” or “might” or,
words or terms of similar substance or the negative thereof, are
forward-looking statements. Forward-looking statements include
statements relating to the following: (i) future capital expenditures,
expenses, revenues, earnings, economic performance, indebtedness,
financial condition, share buybacks, dividend policy, losses and future
prospects; (ii) business and management strategies and the expansion and
growth of the Company’s and Versace’s operations and benefits from the
acquisition; and (iii) the effects of government regulation on the
Company’s or Versace’s business. These forward-looking statements are
not guarantees of future financial performance. Such forward-looking
statements involve known and unknown risks and uncertainties that could
significantly affect expected results and are based on certain key
assumptions. Many risks, uncertainties and other factors could cause
actual results to differ materially from those projected or implied in
any forward-looking statements. These risks, uncertainties and other
factors include the satisfaction of the conditions to consummating the
acquisition, timing of closing of the acquisition, the Company’s ability
to integrate the businesses successfully and to achieve anticipated
benefits of the acquisition; the risk of disruptions to the Company’s or
Versace’s businesses; the negative effects of the announcement of the
proposed acquisition or the consummation of the proposed acquisition on
the market price of the Company’s ordinary shares and its operating
results; significant transaction costs; unknown liabilities; the risk of
litigation and/or regulatory actions related to the proposed
acquisition; fluctuations in demand for the Company’s and Versace’s
products; future levels of indebtedness; future availability of credit;
the timing and scope of future share buybacks, which may be suspended at
any time due to market conditions and the level of other investing
activities and uses of cash, including in connection with the pending
acquisition; changes in consumer traffic and retail trends; loss of
market share and industry competition; fluctuations in the capital
markets; fluctuations in interest and exchange rates; the occurrence of
unforeseen disasters or catastrophes; political or economic instability
in principal markets; adverse outcomes in litigation; and general, local
and global economic, political, business and market conditions, as well
as those risks set forth in the reports that the Company files from
time to time with the U.S. Securities and Exchange Commission. Other
unknown or unpredictable factors could cause actual results to differ
materially from those in the forward-looking statements. Such
forward-looking statements should therefore be construed in the light of
such factors. Unless otherwise required by applicable law, neither the
Company nor Versace, nor any of their respective associates or
directors, officers or advisors, provides any representation, assurance
or guarantee that the occurrence of the events expressed or implied in
any forward-looking statements in this press release will actually
occur. Due to such uncertainties and risks, readers are cautioned not to
place undue reliance on such forward-looking statements. All subsequent
oral or written forward-looking statements attributable to the Company
or Versace or any of their respective members, directors, officers or
employees or any persons acting on their behalf are expressly qualified
in their entirety by the cautionary statement above. The Company and
Versace disclaim any obligation to update or revise any forward-looking
or other statements contained herein other than in accordance with their
legal and regulatory obligations.
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Contacts
Michael Kors Holdings Limited
Katina Metzidakis, +44-201-514-8234
InvestorRelations@MichaelKors.com
or
Media:
Michael Kors Holdings Limited
Francesca Leoni
Press@MichaelKors.com
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