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Italian fashion shop Versace in via Montenapoleone, a high-class shopping district in Milan. Image Credit: AFP

London - Michael Kors is close to announcing a deal to buy Versace, the Italian fashion house, in its latest step toward becoming a rival for Europe's luxury conglomerates, two people with knowledge of the matter said Monday.

The sale would mark the end of independence for one of the most prominent stand-alone fashion houses amid a wave of consolidation within the industry.

Last month, Ermenegildo Zegna acquired an 85 percent stake in Thom Browne, in a deal that valued the U.S. fashion company at $500 million (Dh1.8 billion). In June, Spanish luxury group Puig acquired a majority stake in Dries Van Noten, one of Europe's last outstanding independent labels, for an undisclosed price.

And in May, Richemont, which owns brands including Cartier and Montblanc, acquired luxury e-commerce group Net-a-Porter after an offer of $3.3 billion (Dh12 billion).

Versace, known for a flamboyant embrace of elegance, had long been considered a takeover candidate. In 2014, the Blackstone Group, the U.S. private equity giant, bought a 20 percent stake in the company, and Versace had been exploring publicly listing its shares.

But in January, its chief executive, Jonathan Akeroyd, cautioned that "there is no rush" to hold an initial public offering.

For Kors, the purchase of Versace would burnish its ambitions to become an American counterpart to the European conglomerates such as LVMH and Kering, which have dominated the fashion industry with brands like Louis Vuitton and Gucci.

Kors' aim, in part, is to transcend the "middle market" of the luxury sector. Michael Kors has traditionally been reliant on outlets and department stores, where deep discounting is common AFP

In 2017, Kors bought the British shoe company Jimmy Choo for $1.2 billion (Dh4.4 Billion). Kors is not alone in its calculated buying spree - and is competing with other deep-pocketed suitors such as the company formerly known as Coach - now called Tapestry - which has bought brands including Kate Spade and Stuart Weitzman.

Versace Family

Versace, controlled by its namesake family since the 1997 murder of founder Gianni Versace, and since been managed by his siblings Donatella and Santo Versace, offers Kors an intriguing skein of possibilities.

Gianni and Donatella Versace in 1997, before the killing of Gianni. Donatella who runs the company, called a meeting with employees Tuesday to announce the sale, according to two people familiar with the situation. AP

The Milan-based brand is known for its Medusa-head logo, glamorous gowns and bold printed pieces that sell for thousands of dollars. Although it struggled financially after Versace's death, it turned around its fortunes by slashing debt and ending some franchising and licensing agreements.

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As a privately held company, Versace does not disclose its financial details. Documents filed with the Italian Chamber of Commerce in 2017 show that the fashion house collected sales of $786.50 million (Dhs2.9 Billion), and reported $52.5 million (Dhs193 million) in earnings before interest, tax, depreciation and appreciation.

Shares of Kors fell more than 7 percent on Monday following news of the sale talks, which were reported earlier by Corriere della Sera, the Italian newspaper.