(CNN Money) — Michael Kors might be about to snap up Versace.

The US handbag maker is close to buying Versace in a deal that values the Italian fashion house at around $2 billion, according to Bloomberg. The deal could be announced as soon as this week.

Versace declined to comment. Michael Kors and private equity firm Blackstone, which owns 20% of Versace, did not immediately respond to a request for comment.

The Versace family, which owns the remaining 80% of the brand, will continue to have a role in the company, according to Bloomberg.

Michael Kors has been looking to bolster its group of luxury retailers against rivals such as Louis Vuitton owner LVMH and Tapestry, the parent of Coach and Kate Spade. Last year, Michael Kors bought luxury shoe brand Jimmy Choo for $1.2 billion.

Investors were skeptical: Shares in Michael Kors dropped 7% on Monday.

Neil Saunders, managing director of the consultancy GlobalData Retail, said that buying Versace would add a “big-hitting brand with true global status into Michael Kors’ stable.” The 40-year-old fashion house returned to profit in 2017 and reported revenue of nearly $800 million.

Saunders said that Michael Kors should work to tone down “some of the brasher elements” of the Versace brand in order to appeal to modern consumers. But the deal would help Michael Kors compete against larger rivals.

“While it is true that the enlarged group would be able to make savings on central costs, we don’t see the addition of a brand like Versace being about helping to boost the Michael Kors brand,” said Saunders.

“It is much more a play to give the group a more rounded and defensible proposition that has a number of brands to drive performance across different parts of the market,” he added.

The-CNN-Wire
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