What is happening to Versace?

On Thursday, the U.S. court blocked the acquisition of the Capri Holdings group, owner of Michael Kors, Versace, and Jimmy Choo, by Tapestry, which controls Coach, Kate Spade, and Stuart Weitzman. The deal was initially launched in August last year and had received immediate approval from both the European Union and Japan. For the United States, the merger would have created «a monopoly operation in the accessible luxury market», capable of eliminating «direct competition between the six brands, gaining a dominant share in fashion and accessories with the power to unfairly raise prices for consumers». Thus, the $8.5 billion operation was officially blocked last week by the American antitrust authorities, although now the two groups want to appeal. Meanwhile, rumors are increasing about the potential sale of Versace, owned by Capri Holdings since 2019, driven by significant declines in sales that are seriously affecting the group's overall performance. 

In a statement released by Tapestry immediately after the merger block, the group expressed disappointment and intent to appeal. «Tapestry and Capri operate in an intensely competitive and dynamic sector, continually expanding and highly fragmented among both established and new operators. We face competitive pressures from both low-priced and higher-priced products and continue to believe that this transaction is beneficial to competition and consumers. We intend to appeal the decision, consistent with our obligations under the merger agreement.»

The revenue decline of Versace (and Michael Kors) could be one of the many reasons Capri Holdings is fighting to complete the acquisition. In the first quarter of 2024, Versace's sales dropped by 15.4%, leading Capri Holdings to overall losses of 13.2%. According to reports from Pambianco News, potential buyers of Versace could include Exor, an Italian group owned by John Elkann, and Kering. However, if the merger between Capri and Tapestry is blocked a second time, the group that owns Michael Kors, Versace, and Jimmy Choo may have no choice but to sell off what remains, go private, and start over.