Prada recently struck a $1.375 billion deal to purchase Versace from Capri Holdings, including its debt. The merger of these two iconic Italian fashion houses comes as Prada aims to expand despite the slowdown in luxury demand, while Versace has been experiencing losses in recent quarters. This move aims to strengthen Italy’s position in the luxury fashion industry dominated by French conglomerates, with LVMH being the largest.
The deal follows the news that Donatella Versace, who was the chief creative officer of the brand, would be stepping down. Prada Chairman Patrizio Bertelli expressed plans to continue Versace’s legacy while providing it with a strong platform and investments to support its growth. Donatella Versace, whose family had previously sold the business, expressed admiration for the Prada family and their support for the brand’s new era.
The price that Prada has agreed to pay for Versace represents a discount compared to the amount Capri Holdings paid when they acquired the brand in 2018. Despite previous valuations and potential market turmoil over tariffs, Prada is committed to increasing shareholder value and powering the growth of its other brands like Michael Kors and Jimmy Choo. Although Capri shares were lower following the announcement, the move aims to attract new customers to Prada through Versace’s bold and baroque-style prints.
Prada’s commitment to acquiring Versace comes at a time when many acquisitions and IPOs have been affected by global economic uncertainties and market sell-offs. Since facing challenges with previous acquisitions in the late 1990s, Prada has taken a cautious approach to major dealmaking until this recent purchase of Versace. The agreement reflects Prada’s dedication to disciplined execution and patience as they integrate Versace into their portfolio.
Prada has a rich history dating back to a leather goods shop established in Milan in 1913, while Versace was founded by Gianni Versace in 1978. Following Gianni’s tragic death, Donatella became the creative force behind the Versace brand. Prada, which is listed in Hong Kong, has experienced considerable growth under the leadership of Miuccia Prada and Patrizio Bertelli, who also owned other successful brands like Miu Miu and Church’s shoes. The merger with Versace represents a significant step for both companies in the competitive luxury fashion market.
