Prada acquires Versace for $1.38bn in major luxury fashion deal

Prada secures Versace for $1.38bn, aiming to compete with luxury giants like LVMH while reducing debt for Versace’s former parent company

In a significant move within the luxury fashion industry, Prada announced on Tuesday that it has acquired Versace for a total of $1.38bn (£1.04bn), bringing two of Italy’s most iconic fashion houses under the same umbrella. The deal expands Prada’s luxury portfolio, which already includes brands like Miu Miu, as the company looks to strengthen its position against competitors such as French powerhouse LVMH, which owns brands like Dior, Fendi, and Louis Vuitton.

The acquisition marks a new chapter for Versace, which has been struggling with sluggish sales since being acquired by Capri Holdings in 2018 for $2.15bn. Capri Holdings, which also owns Michael Kors and Jimmy Choo, has stated that the proceeds from the sale of Versace will go towards repaying a significant portion of its debt, thus strengthening its financial position.

Versace’s long-time creative head, Donatella Versace, stepped down earlier this year after an impressive 27-year run at the company. She had taken over leadership in 1997, following the tragic murder of her brother Gianni Versace, who founded the brand. Dario Vitale, the former design director of Prada’s youth-oriented brand Miu Miu, will take over as the new creative lead for the brand.

The agreed purchase price is notably lower than the $2.15bn Capri paid for the brand just five years ago, highlighting the challenges Versace has faced in recent years. However, Prada sees significant potential in the brand. Andrea Guerra, the CEO of Prada, noted earlier this year that Versace has “huge potential,” emphasising the long-term vision for the brand’s growth. “The journey will be long and will require disciplined execution and patience,” Guerra added.

The successful completion of the acquisition comes after receiving all necessary regulatory clearances. Capri’s CEO, John D. Idol, expressed confidence in the deal, stating that the proceeds will significantly improve the company’s financial standing and allow it to focus on its other brands, including Michael Kors and Jimmy Choo.

This acquisition marks a strategic move for Prada as it looks to bolster its competitive edge in the high-end fashion market, joining forces with one of the most glamorous names in the industry to compete with the likes of LVMH and Kering, which also hold stakes in several high-end fashion brands.