Prada Buys Rival Versace for $1.4 Billion

Prada has successfully countered the recent downturn affecting much of the luxury sector.

Prada store on Fifth Avenue in New York City. Image: alamy

The Prada Group announced on Thursday an agreement to acquire Italy's Versace from the U.S. luxury conglomerate Capri Holdings, with the transaction valuing the fashion brand at 1.25 billion euros ($1.4 billion).

Prada stated that the incorporation of Versace's "distinctive aesthetic … represents a significantly complementary enhancement" to its portfolio, which encompasses the Prada and Miu Miu fashion brands. Milan-based Versace presented "considerable unexploited growth potential."

The ultimate value of the transaction will be modified at the close, anticipated in the latter half of the year. The initiative will be financed through 1.5 billion euros in new debt and has received approval from the boards of directors of Prada and Capri Holdings.

Prada stated that Versace will preserve its artistic essence and cultural authenticity while leveraging the comprehensive strengths of the Group's substantial consolidated platform, which encompasses industrial skills, retail execution, and operational expertise.

Versace, established in 1978 by the late Gianni Versace, has been under the ownership of Capri Holdings since 2018, which also encompasses Michael Kors and Jimmy Choo.

Capri Holdings acquired Versace for $2 billion but has had challenges in the contemporary trend of "quiet luxury" to align the iconic Italian fashion brand known for its provocative silhouettes and bold motifs.

Last month, Capri Holdings appointed Dario Vitale as creative director, after Donatella Versace, who took on the position following her brother's death in 1997. Vitale originated from Miu Miu, the exceptionally prosperous youth-oriented brand inside the Prada Group.

Versace was appointed as the principal brand ambassador in the reorganization, which was largely perceived as paving the way for the anticipated sale of Prada. Miuccia Prada saw the group's interest during Milan Fashion Week in February.