Blackstone Group LP owns 20 percent of Versace, and it is unclear if they will be selling their stake as well.
The deal is expected to close in the fourth fiscal quarter, subject to regulatory approvals.
It has been less than a year since Kors shelled out $1.2 billion to buy Jimmy Choo.
"Michael Kors is not buying Versace to keep its luxury business going", Mark Weber, fashion expert and former CEO of LVMH Inc., tells FOX Business.
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She says the deal would now give Kors the ability to "properly compete with Kering's power brand, Gucci".
French luxury group LVMH, led by billionaire Bernard Arnault, took full control of Christian Dior, in a €12bn deal that reunites the fashion house with the perfume and other Dior brands.LVMH, owns Dior perfumes and beauty after a deal in the 1960s to raise capital for the then-struggling brand. The rest of the company is held by the Versace family. Sales of Kors' own brand, which was built on the success of accessibly priced designer handbags and watches, have suffered in recent years. While talks are advanced, no final agreements have been reached, the people said. The shares had recovered since then, trading 15 per cent higher for the year through the end of last week, with Choo boosting the latest quarterly results.
Blackstone, whose stake acquisition valued Versace at $1.4 billion in 2014, declined to comment.
While she has since recovered and still runs Versace, the company is only modestly profitable, generating about $18 million in profits on $822 million in sales a year ago. The company had been working toward an initial public offering, though market conditions haven't allowed it to move ahead. Donatella Versace now serves as its creative director, while Santo Versace is its chairman. The 40-year-old fashion house returned to profit in 2017 and reported revenue of almost $800 million.
Italian Fashion House Versace opens the Haute Couture Fashion Week. She presented her latest collection for next spring and summer last Friday during Milan Fashion Week and was honored on Sunday by the Italian Fashion Chamber.