A man carries a Gianni Versace branded shopping bag. (Photographer: Francesca Volpi/Bloomberg)
Michael Kors Holdings Ltd. will buy Italian fashion label Gianni Versace SpA for 1.83 billion euros (R34 billion), bringing the American luxury company closer to its goal of becoming an international house of fashion brands.

The company said it plans to increase Versace’s sales to $2 billion annually, more than double the current level, expanding the number of stores globally to 300 from about 200 and accelerating e-commerce development. Michael Kors said it will rename itself Capri Holdings Ltd. as it develops its multibrand luxury strategy.

Designer Michael Kors waves after the showing of his Spring/Summer 2019 collection during New York Fashion Week. (Reuters)
“The acquisition of Versace is an important milestone for our group,” Michael Kors Chief Executive Officer John Idol said in a statement. “We are committed to investing in its growth.”

The Versace deal is the third billion-dollar acquisition made by Kors or chief competitor Tapestry Inc. since early last summer, as the two rivals shop for high-profile fashion labels to add to their portfolios. Coach-owner Tapestry bought handbag label Kate Spade for $2.4 billion last year and Kors purchased high-end shoemaker Jimmy Choo about two months later for around $1.2 billion.

Donatella Versace comes on the catwalk at the end of Versace's women's 2019 Spring-Summer collection, unveiled during the Fashion Week in Milan, Italy, Friday, Sept. 21, 2018. (AP Photo/Antonio Calanni)
Versace adds high-end couture credibility and heritage to Kors. The 40-year-old fashion house, founded by Gianni Versace, celebrates extravagance with its baroque designs, filling runway shows and red carpets with brash prints and vibrant color. Though it boasts a sizable presence in pop culture, it has struggled to increase sales and attract new shoppers. Last year, Versace had revenue of 686 million euros and returned to profit, according to figures provided by the company.

Michael Kors has been undergoing a revitalization with its new multibrand structure in place, after years of heavy discounting and strong competition took a toll on the business. Jimmy Choo’s performance lifted Kors in the last quarterly results, though Michael Kors brand comparable store sales -- a key retail metric -- remained flat.

Versace is still controlled by the family of its founder, Gianni, who was killed in Miami in 1997. His sister Donatella, 63, is the house’s creative director and will “continue to lead the company’s creative vision,” Idol said. She and another brother, Santo, will become shareholders in Michael Kors.