Prada on Thursday struck a deal to buy smaller rival Versace from Capri Holdings for $1.375 billion, including company debt, in a deal that brings together two of the biggest names in Italian fashion, UNN reports, citing Reuters.
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Prada is looking to expand, defying a slowdown in demand for luxury goods, while Versace is operating at a loss. The merger strengthens Italy's position in the luxury industry, led by French conglomerates, the newspaper writes.
The deal followed the March 13 announcement that Donatella Versace is stepping down as chief creative officer of the brand founded by her late brother Gianni.
"We are committed to continuing Versace's legacy by celebrating and reinterpreting its bold and timeless aesthetic," said Prada Chairman Patrizio Bertelli.
"At the same time, we will provide him with a solid platform, backed by years of consistent investment and rooted in long-standing relationships," added Bertelli, husband of Prada designer Miuccia Prada. The couple are the company's leading shareholders.
The price Prada agreed to pay for Versace is a big discount compared to the approximately $2.15 billion, including debt, that Capri paid for Versace in 2018. Formerly known as Michael Kors, Capri bought Versace from the Versace family and Blackstone.
Owning Versace with its bold baroque prints will attract new customers to Prada, known for its minimalist style, the newspaper writes.
"Versace has enormous potential. The road will be long and will require disciplined execution and patience," said Andrea Guerra, CEO of Prada.
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The move comes at a time when several acquisitions and IPOs have been thwarted by a global stock sell-off and recession fears triggered by new tariffs from US President Donald Trump this month.
Following Prada's acquisitions in the late 1990s of Helmut Lang and Jil Sander, which Prada's leading shareholder Bertelli called "strategic mistakes," the group has largely avoided major deals.