Private equity group Blackstone bought a 20 per cent stake in the Italian firm in 2014, and planned to list it on the stock market.
But Blackstone is reported to have found the investment disappointing, and has since abandoned its plans for a float.
The remaining 80 per cent of the Italian luxury group, which was founded by Gianni Versace 40 years ago, is owned by the Versace family.
According to Reuters’ sources, Blackstone “gradually persuaded the family to look into a possible sale and introduced them to a series of buyers, including Michael Kors”.
“Blackstone wasn’t going to put any more money into it. They needed a buyer who could make heavy investments.”
Sources have said the deal values Versace at $2bn (£1.5bn) and said an official announcement from Michael Kors and Versace is expected this week.
Last year, Michael Kors bought shoe designer Jimmy Choo in a £900m takeover. Ahead of the deal, Michael Kors had been struggling with declining sales.
Versace recently announced plans to stop using fur in its collections.
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