U.S. fashion group Michael Kors has agreed to take control of Versace in a deal that values one of Italy's most prized designers at $2 billion, the company announced Tuesday.

Budding luxury conglomerates, including Michael Kors' U.S. rival Tapestry, owner of Coach and Kate Spade, are trying to make in-roads into an industry still dominated by European players such as Louis Vuitton owner LVMH.

Michael Kors, whose namesake label is best known for its leather handbags, will change its name to Capri Holdings, the company said on Tuesday.

Versace, known for its bold and glamorous designs and its Medusa head logo, is one of a clutch of family-owned Italian brands cited as attractive targets at a time when the luxury industry is riding high on strong demand from China.

The move is in line with the U.S. brand's ambition to aggregate various luxury brands — including fashion, shoes and accessories — under one larger group. It has made no secret of its ambition to grow its portfolio of high-end brands after buying British stiletto-heel maker Jimmy Choo for $1.2 billion last year.

The Versace deal gives Michael Kors a mega-brand and red carpet favorite that is among the most recognizable and followed fashion labels in the world.

The Italian fashion icon had been considering a market listing after U.S. private equity group Blackstone bought a 20 percent stake in 2014 to fund overseas expansion, although Chief Executive Jonathan Akeroyd told Reuters earlier this year there was no rush for an IPO.

After investing in Versace at a high multiple, Blackstone found its performance insufficient to justify a market listing, said one of the sources, who is close to the family.

"They gradually persuaded the family to look into a possible sale and introduced them to a series of buyers, including Michael Kors," the person added.

"Blackstone wasn't going to put any more money into it. They needed a buyer who could make heavy investments."