Michael Kors  (KORS) confirmed Tuesday that it will buy Italian luxury fashion house Gianni Versace SpA for around $2 billion and rename the combined company Capri Holdings Limited.

Michael Kors said the deal, which has been subject to intense media speculation over the past few days, has an enterprise value of €1.83 billion ($2.12 billion) and will be funded though cash and drawings from a revolving credit facility, although it is not subject to any financial conditions. The deal, which is expected to dilute group earnings "in the high single digits" in the 2020 fiscal year, will start adding to the combined group's bottom line in the following two years, with a longer-term aim of boosting global group sales to $8 billion .

"The acquisition of Versace is an important milestone for our group. Versace was founded in 1978. For over 40 years, Versace has represented the epitome of Italian fashion luxury, a testament to the brand's timeless heritage," said CEO John Idol. "We are excited to have Versace as part of our family of luxury brands, and we are committed to investing in its growth. With the full resources of our group, we believe that Versace will grow to over US$2.0 billion in revenues".

"We believe that the strength of the Michael Kors and Jimmy Choo brands, and the acquisition of Versace, position us to deliver multiple years of revenue and earnings growth," he added in a statement.

Michael Kors shares, which fell 8.21% yesterday, were marked 0.23% lower in the opening 45 minutes of trading Tuesday to change hands at $66.54 each, a move that trims the stock's year-to-date gain to around 5.7% and values the London-headquartered group at just under $10 billion.

Michael Kors said Versace's management team would continue to be led by CEO Jonathan Akeryod, adding that Santo, Allegra and Donatella Versace would become shareholders in the new Capri Holdings Limited group.

"Since I joined Versace over two years ago, our focus has been on leveraging the company's heritage and strong brand recognition worldwide, which has allowed us to experience significant growth in all regions," Akeroyd said. "Donatella's unmatched vision has led to the continued and growing success of our brand. I am thrilled to be joining Capri Holdings Limited, which will be instrumental in accelerating our growth globally."

The company said it plans to grown Versace's global revenues to around $2 billion over the longer-term, increase its global footprint by 50% to 300 stores and expand men's and women's accessories and footwear sales by 25 percentage points to 60% of total Versace revenues.