The $2.1 billion acquisition of Versace by Michael Kors Holdings Limited generated a lot of chatter amongst us, luxury brand professionals and consumers - much of it negative, but its leads to the creation of the First US Luxury Conglomerate, and thus is an historic week.

A big number of consumers appear to think so and took to social media to express themselves. “We know Gianni didn’t die for this,” tweeted Scott Timlin, a former MTV star, referring to the designer’s 1997 murder by a mentally disturbed fan. “Time to get Versace at your local TJ MAXX and Marshall’s,” tweeted freelance writer Danielle Ayoka.

By May of last year, Michael Kors was slamming on the brakes, closing 125 stores and curtailing the promotions that had sullied its luxury image in the minds of so many consumers since it had expanded in break-neck speed over the past one decade and had diluted its brand in saturated markets. Buying an esteemed house like Versace has an obvious benefits for Kors, which plans to build the brand’s marketing, increase its store count from 200 to 300 and bump its revenues up to $2 billion. But will Versace lose its luster under Kors’ ownership?

Many consultants in the Luxury sector think not. Michael Kors knows its customers and is strategically collecting brands like Versace instead of fragmenting itself. Michael Kors is investing wisely, they said.

It’s worth pointing out that mass-market companies owning rarified luxury brand is nothing new. While many consumers are unaware of the fact, Volkswagen owns Bentley, for example. Budget-friendly cruise behemoth Carnival happens to own the legendary Cunard line. Grey Goose vodka is a property of Bacardi Limited, and so on.

Michael Kors has been on a bit of a buying spree, picking up Jimmy Choo [for $1.2 billion in July of 2017.] But what makes a company successful at the middle ground of the market (MK) may not be what makes a company successful at the high end of the market.

Initial news of the acquisition resulted in a sell-off in Kors stock, causing the stock price to drop 8.21%.

The new corporate overhaul to launch Capri Holdings. This new luxury fashion conglomerate is the first for the U.S., in a world where France, Italy, and Switzerland have traditionally led.

Market sources highlighted that this deal strengthens Michael Kors’ position in the global luxury market. As John D. Idol, chief executive of Michael Kors, put it in the announcement release, this is a “milestone.”

After buying Jimmy Choo and Versace, Michael Kors renamed to Capri Holdings to create America’s first Luxury Group. The question is will it be successful ?

Michael Kors isn't the first American to try to create a homegrown version of the conglomerates that dominate European luxury, recalls the CNN.

Several have tried, including Liz Claiborne who purchased American mid-market brands Juicy Couture, Lucky Brand jeans and Kate Spade in 2012. Most recently Tapestry has tried something similar by bringing together brands like Coach, Kate Spade and Stuart Weitzman under the same roof.

Let’s enjoy this historic moment in the making, as Capri Holdings unfolds its newest footprint in the new Luxury world order.

Content Sources: Ad-Week and Fashion United.

Edited by Simrita Dhillon.