Prada struck a $1.38 billion deal to buy smaller rival Versace from US-based Capri Holdings on Thursday, April 10, in a move that unites two of the biggest names in Italian fashion and offers the prospect of enhanced revenues. Prada is seeking to expand, having defied a slowdown in luxury demand, while Versace has been operating at a loss in recent quarters.
With its bold, baroque-style prints, owning Versace will attract customers to Prada, known for its minimalist style. “There are no overlaps in creativity or customers,” said Lorenzo Bertelli, marketing director and a family member who controls Prada. The merger strengthens Italy’s luxury industry, led by French conglomerates, the biggest of which is Louis Vuitton owner LVMH.
“We will provide (Versace) with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships,” Prada Chairman Patrizio Bertelli said in a statement. Bertelli is the husband of Prada designer Miuccia Prada, and the couple are leading shareholders in the company.
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Prada Chief Executive Andrea Guerra told analysts in a conference call that the acquisition is a long-term project aimed mainly at expanding revenues rather than cost-savings. It follows the announcement on March 13 that Donatella Versace was stepping down as the brand’s chief creative officer founded by her late brother Gianni in 1978.
The price Prada has agreed to pay for Versace, which includes debt, is a big discount to the roughly $2.15 billion debt that Capri, then known as Michael Kors, paid for Versace in 2018 when the Versace family and Blackstone sold it.
But amid declining sales it sought a buyer, opening exclusive negotiations with Prada at the end of February. Capri, which also owns Jimmy Choo and Michael Kors, had to accept a reduced price from Prada amid the market turmoil caused by US 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. Prada said it had committed to 1.5 billion euros of new debt to fund the deal, which is expected to close in the year’s second half.
The deal comes as several acquisitions and initial public offers have been scuttled in the wake of a global equity sell-off and fears of a global recession triggered by US President Donald Trump’s new tariffs this month.
Prada’s new direction
The Versace acquisition marks a major shift in the group’s strategy. It comes two years after Guerra was appointed at the helm, a role previously held by Patrizio Bertelli and Miuccia Prada. Prada traces its roots back to a leather goods shop founded in Milan by Miuccia Prada’s grandfather in 1913.
The Versace label, known for its Medusa head logo, was founded by Gianni Versace in Milan. Donatella became its creative force following Gianni’s killing 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.
