Prada announced a major acquisition on Thursday, securing a $1.375 billion agreement to purchase its Italian fashion counterpart, Versace, from Capri Holdings, which includes the assumption of debt.
Despite a general downturn in luxury goods, Prada has maintained growth and is looking to broaden its market share, while Versace has recently reported losses over several quarters.
This merger bolsters Italy’s presence in the global luxury market, which is dominated by French groups such as LVMH, the parent company of Louis Vuitton.
This strategic move comes after Donatella Versace’s March 13 announcement that she would resign as chief creative officer of the brand her brother Gianni Versace founded.
“We aim to continue Versace’s legacy by celebrating and re-interpreting its bold and timeless aesthetic,” said Prada Chairman Patrizio Bertelli.
Bertelli, who is married to Prada designer Miuccia Prada and is a leading shareholder, added, “At the same time, we will provide it with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships.”
Donatella Versace, whose family divested their interest in the company seven years ago, commended the new alliance. “Gianni and I have always had a huge admiration for Miuccia, Patrizio, and their family,” she said.
“I am honored 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.
The agreed acquisition price is significantly lower than the $2.15 billion, including debt, that Capri Holdings paid in 2018 for Versace when it was known as Michael Kors.
Market fluctuations and recent tariff concerns had impacted earlier valuations, which had suggested figures around 1.5 billion euros ($1.7 billion).
“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.
Following the announcement, Capri’s stock declined by 3% in early trading in New York and is down some 24% year-to-date.
The acquisition promises to diversify Prada’s customer base, adding Versace’s vibrant and ornate designs to its traditionally understated aesthetic.
Andrea Guerra, CEO of Prada, stated, “Versace has huge potential. The journey will be long and will require disciplined execution and patience.”
To finance the acquisition, Prada has taken on commitments for 1.5 billion euros in new debt.
The transaction occurs amidst a challenging financial climate marked by canceled acquisitions and IPOs, largely due to global market downturns and new economic policies from the U.S.
This acquisition marks a shift for Prada, which had previously avoided major mergers following less successful ventures in the late 1990s with brands like Helmut Lang and Jil Sander.
Founded in 1913 in Milan by Miuccia Prada’s grandfather, Prada has grown significantly, especially known for its leather goods.
Versace, established in Milan by Gianni Versace in 1978 and recognized by its iconic Medusa head logo, saw Donatella Versace take over as the creative lead after her brother’s murder in 1997.
Prada, listed in Hong Kong, has seen rapid expansion under the guidance of Miuccia and Bertelli, including acquisitions like Miu Miu and Church’s shoes.
