PARIS - Versace on Thursday became the latest luxury label to be successfully courted by a Wall Street investor, confirming that it had agreed to sell a 20 percent stake to the Blackstone Group, an American private equity firm, in a deal that values the Italian fashion house at nearly $1.4 billion.
It a joint statement, the two companies announced that Blackstone would invest a total of 210 million euros, or $287 million, in Versace through a combination of €150 million cash and the purchase of €60 million euros in shares from GIVI, a holding company controlled by the Versace family.
With its eye-catching gowns favored by pop idols like Madonna and Lady Gaga, Versace has long been one of the best-known presences on the runway. But while it had fiercely guarded its independence, Versace has seen itself eclipsed by rivals like Prada, Salvatore Ferragamo and Michael Kors, which have recently tapped outside investors to fuel their global expansion.
The brand, which struggled financially for years after the 1997 murder of its founder, Gianni Versace, returned to profit in 2011. Under the leadership of Gian Giacomo Ferraris, a fashion industry veteran who became chief executive in 2009, Versace slashed its debt and ended a number of franchising and licensing agreements that had allowed control of its key brands to slip away.
With the restructuring firmly behind it, Mr. Ferraris set his sights on expansion, with the understanding that Versace had few alternatives other than to sell a minority stake. The company tapped Goldman Sachs and Banca IMI in 2012 to begin sounding out private investors. The list of rumored suitors was long, including the government-backed Fondo Strategico Italiano, Investcorp of Bahrain as well as the Wall Street buyout firm KKR and Permira Advisers, whose stable of global brands includes Hugo Boss and Dr. Martens.
Mr. Ferraris, in a statement, said Versace was “incredibly excited†by Blackstone’s investment, which he said “recognizes the work done over the past years to put the company on solid ground.’’
Versace said Blackstone’s investment would be used primarily to finance an expansion of its retail networks, as well as its product offerings in both existing and emerging markets, as well as to enhance its e-commerce business.
Under the terms of the agreement announced Thursday, Blackstone will gain a seat on Versace’s six-member board.
Versace said family members would retain “important,’’ though as-yet unspecified, roles within the new company. Donatella Versace has until now served as the brand’s creative director, while her brother Santo has been chairman. Donatella’s daughter, Allegra Versace Beck, is a non-executive director.
Analysts said Versace would do well to seize the moment to revive and update the brand for an era of fast-changing tastes, particularly in key growth markets like Asia.â€
“I think Donatella has done a great job of keeping the DNA of the brand alive,’’ said Luca Solca, a luxury analyst at Exane BNP Paribas in London. “But every brand has to adapt. I think fresh creative talent can do that and bring new ideas.’’ he said.
“The brand is potentially quite important,’’ Mr. Solca added. “It just hasn’t managed to be center stage or relevant for the present time.’’
Michael de la Merced contributed reporting from New York.
