Versace has been considering a listing, after USA private equity group Blackstone bought a 20 percent stake in 2014 to fund overseas expansion, although Chief Executive Jonathan Akeroyd told Reuters earlier this year there was no rush for a market debut.
London-based Kors a year ago snapped up shoemaker Jimmy Choo Plc for about £896 million ($1.2 billion), expanding beyond its namesake brand.
At the time of founder Gianni Versace's death, the company had been making plans for a listing on the New York Stock Exchange, but it has remained private ever since.
It also cited rumours saying that the buyer could be USA fashion group Michael Kors Holdings Ltd's (KORS.N) or jeweler Tiffany & Co (TIF.N). Versace and Michael Kors declined to comment. The strategy follows moves by other fashion companies.
While Kors would be adding a major brand with worldwide global status to its business, the Versace business still needs work, according to Neil Saunders, managing director of GlobalData Retail.
She says the deal would now give Kors the ability to "properly compete with Kering's power brand, Gucci". Versace designs, manufactures and distributes clothes, jewellery, watches, eyewear, accessories and home furnishings that bear the company's distinctive Medusa logo. The Kors brand struggled with a cheap image after it broadly distributed its products to department stores and outlet malls, which heavily discounted its goods.
As part of the deal, Blackstone will fully exit Versace, while the family, which owns the rest of the fashion house via a holding company called Givi, will keep a role, the sources said.
Kors, whose shares are listed in NY, alarmed investors earlier this year when it reported a decline in retail sales under its main brand in the Americas, even as the smaller European and Asian markets fared better.
Versace does not disclose its financial details, but documents deposited with the Italian chamber of commerce show the Milan-based group previous year posted sales of €668 million ($1 billion Cdn) and earnings before interest, tax, depreciation and appreciation (EBITDA) of €44.6 million ($67.7 million Cdn).
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Also vintage was Woods's reception, an outpouring chorus of support that greeted and trailed him on either end of every shot. Not even one bad hole could keep Tiger Woods from a share of the 36-hole lead for the first time in more than five years.