By Carlo Versano

Michael Kors ($KORS) is on the hunt for upscale names to add to its portfolio, and Versace is the brand's latest target.

The storied Italian fashion house known for its eponymous founder Gianni Versace, its Medusa logo, and flashy designs has agreed to sell itself to sportswear designer Michael Kors in a $2.1 billion deal.

Michael Kors is "clearly in empire-building mode," Evan Clark, deputy managing editor at Women's Wear Daily, said Monday, before the deal was announced. He noted the company's $1.2 billion purchase of shoemaker Jimmy Choo last year.

For Kors ー which will be renamed Capri Holdings once the deal is complete ー the Versace brand adds the cachet of a top European brand to its status as a purveyor of "affordable luxury."

As retail consolidates, brands have been under increasing pressure to combine forces ー and markets, for that matter.

In Europe, retail conglomerate LVMH is thought to be the standard-bearer for how a large portfolio of individual luxury brands can work together, combining names like Louis Vuitton, Moët & Chandon, Bulgari, Dior, and more.

Michael Kors and Tapestry ($TPR) ー the parent company of Coach, Kate Spade, and Stuart Weitzman ー are engaged in a kind of arms race "chasing this dream," Clark said.

Versace is synonymous with the family that has always tightly controlled it. Since Gianni Versace's high-profile murder in 1997, the brand has been led by his sister Donatella, who will stay on to oversee the unit once the deal is done.

The fashion house is a "rare animal," according to Clark: a bona fide luxury brand with roughly €700 million ($800 million) in sales that also has room to expand, particularly in the U.S.

On the other hand, Michael Kors is largely considered an American brand with an American base. After all, when the label's founder and namesake appeared on the first 10 seasons of "Project Runway" as a judge, Kors was introduced as a "top American designer" each week. But clearly the designer has serious global ambitions.

"Kors is thinking of growth," Clark said. "I don't think they're done."

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