Prada to purchase Versace for 1.25 billion euros to create new Italian luxurious large

Prada stated Thursday that it had reached a deal to purchase Versace for 1.25 billion euros (USD 1.38 billion), constructing a brand new Italian style powerhouse and hoping to insert much-needed “spark” into its smaller, flashier rival.

The a lot anticipated acquisition, from US group Capri Holdings, will create a gaggle with revenues of over six billion euros that would higher compete with giants such because the French conglomerates LVMH and Gucci proprietor Kering.

“We’re delighted to welcome Versace to the Prada Group and to construct a brand new chapter for a model with which we share a robust dedication to creativity, craftmanship and heritage,” Prada Group chairman Patrizio Bertelli stated.

In 2018, Capri paid 1.83 billion euros (then $2.1 billion) to accumulate Versace, which was beforehand owned 80 % by the Versace household and 20 % by the US funding fund BlackRock. However amid declining gross sales it sought a purchaser, opening unique negotiations with Prada on the finish of February.

Capri, which additionally owns Jimmy Choo and Michael Kors, needed to settle for a lowered value from Prada amid the market turmoil attributable to US President Donald Trump’s tariffs. The Monetary Instances had reported that the worth was initially anticipated to be about USD 1.6 billion however had been negotiated downwards in latest days.

Donatella’s departure

Final month, Donatella Versace stepped down as inventive director after greater than 30 years, a transfer extensively seen as a prelude to the accord.

She took over in 1997 following the homicide of her older brother Gianni, who based the label in 1978. However on April 1 she was changed as inventive director by Dario Vitale, who has overseen hovering gross sales at Miu Miu, Prada’s sister model concentrating on a youthful clientele. Donatella will now function Versace’s chief model ambassador.

Whereas nonetheless a label related to the jet set, a few of Versace’s lustre has pale lately.

Capri had anticipated turnover to fall to $810 million throughout its 2025 fiscal yr, in keeping with Prada, down from $1.03 billion a yr earlier. In contrast, Prada, underneath the inventive helm of Miuccia Prada, the 76-year-old granddaughter of group founder Mario, is in strong well being.

Regardless of a world slowdown in luxurious good gross sales lately, Prada’s internet revenue jumped 25 % to 839 million euros in 2024, on revenues that grew 15 % to five.4 billion euros.

Andrea Guerra, Prada’s group chief govt, stated Thursday that Versace had “large potential” however warned there was work to do. “The journey will likely be lengthy and would require disciplined execution and persistence,” he stated. The deal, funded by means of 1.5 billion euros of latest debt, is predicted to shut within the second half of 2025.

For its half, Capri stated the sale would enable it to step up investments in Michael Kors and strengthen its steadiness sheet.

No revolution

The 2 style labels have starkly completely different types, with Versace’s exuberance contrasting with Prada’s subtle minimalism.

Prada stated its new acquisition “constitutes a strongly complementary addition” to its portfolio and promised to “preserve its inventive DNA and cultural authenticity”.

“I don’t assume we have to change the model, to revolutionise it,” Prada’s advertising and marketing director, Lorenzo Bertelli, advised analysts throughout a convention name. “We have to simply evolve it… all collectively, they’re going to make, hopefully, an enormous spark and produce again Versace to be an enormous success.”

Bertelli, the eldest son of Miuccia Prada and Patrizio Bertelli and who is predicted someday to take over, stated his mom wouldn’t have inventive involvement in Versace.

Core enterprise

The deal bucks the pattern of latest years, which has seen main names in Italian style equivalent to Gucci, Fendi, and Bottega Veneta fall underneath the management of their French opponents.

Nevertheless, a earlier try to broaden the Prada portfolio — which additionally contains luxurious footwear manufacturers Automobile Shoe and Church’s — gives a cautionary story. In 1999, the household group acquired the German model Jil Sander and the Austrian label Helmut Lang earlier than promoting them in 2006 as they have been weighing down its monetary outcomes.

In 2000, Prada collectively acquired a 51 % stake within the Roman label Fendi with LVMH, however offered its 25.5 % stake to the French luxurious large a yr later.

With the Versace acquisition, “I see a threat for Prada to turn into distracted from its core enterprise,” Luca Solca, an analyst at Bernstein, advised AFP.