Prada struck a $1.375 billion deal to buy smaller rival Versace from Capri Holdings on Thursday, including its debt, in a move that unites two of the biggest names in Italian fashion.
Prada is seeking to expand, having defied a slowdown in luxury demand, while Versace has been operating at a loss in the last few quarters. The merger strengthens Italy’s hand in a luxury industry led by French conglomerates, the biggest being Louis Vuitton owner.
The deal follows the announcement on March 13 that Donatella Versace was stepping down as the chief creative officer of the brand founded by her late brother Gianni.
“We aim to continue Versace’s legacy celebrating and re-interpreting its bold and timeless aesthetic,” said Prada Chairman Patrizio Bertelli
“At the same time, we will provide it with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships,” added Bertelli, husband of Prada designer Miuccia Prada. The couple are leading shareholders in the company.
Donatella Versace, whose family sold the business seven years ago, praised the new partnership.
“Gianni and I have always had a huge admiration for Miuccia, Patrizio and their family,” she said.
“I am honoured to have the brand in the hands of such a trusted Italian family business and I am ready to support this new era for the brand in any way that I can,” she added.
Discount Price
The price Prada has agreed to pay is a big discount to the roughly $2.15 billion including debt that U.S. based Capri, then known as Michael Kors, paid for Versace in 2018 when it was sold by the Versace family and Blackstone.
Previous media reports had suggested a valuation of around 1.5 billion euros ($1.7 billion) but that was before recent market turmoil over tariffs.
“This transaction reflects our commitment to increase shareholder value, strengthen our balance sheet and power the future growth of Michael Kors and Jimmy Choo,” said Capri CEO John Idol.
The US will still, though, charge a 10% duty on imports from almost all countries, and the uncertainty has made investors very nervous.
Capri shares were 3% lower in early trading in New York and are down some 24% over the year so far.
Owning Versace, with its bold, baroque-style prints, will bring new customers to Prada, known for its minimalist style.
“Versace has huge potential. The journey will be long and will require disciplined execution and patience,” said Andrea Guerra, the CEO of Prada.
Prada said it had committed to 1.5 billion euros of new debt to fund the deal.
The move comes at a time when several acquisitions and IPOs have been scuttled in the wake of a global equity sell-off and fears of recession triggered by US President Donald Trump’s new tariffs this month.
Since Prada’s acquisitions at the end of the 1990s of Helmut Lang and Jil Sander, which leading Prada shareholder Bertelli called “strategic mistakes”, the group has largely steered clear of major dealmaking.
Prada traces its roots back to a leather goods shop founded in Milan by designer Miuccia Prada’s grandfather in 1913.
Known for its Medusa head logo, the label was founded by Gianni Versace in Milan in 1978. Donatella became its creative force following the killing of Gianni in Miami in 1997.
Listed in Hong Kong, Prada has expanded rapidly under Miuccia and Bertelli, owning other brands including the fast-growing Miu Miu and Church’s shoes.
