Prada agrees to buy Versace for a staggering amount

Italian fashion house Prada may have taken the 'eat your competition' mantra too seriously as it just finalized a $1.375 billion acquisition of Versace from Capri Holdings, which includes taking on its debt. This move merges two of the biggest names in Italian fashion.

As Prada looks to grow despite a downturn in luxury goods demand, Versace has been facing losses in recent quarters. This merger enhances Italy's position in an industry predominantly controlled by French conglomerates, with LVMH, the owner of Louis Vuitton, being the largest player.

Prada acquires Versace in a landmark $1.4 billion deal

This shocking announcement comes after Donatella Versace revealed on March 13 that she would be resigning as the brand's chief creative officer, a role she held since its inception by her late brother, Gianni Versace.

“We aim to continue Versace’s legacy celebrating and re-interpreting its bold and timeless aesthetic,” said Prada Chairman Patrizio Bertelli.

“At the same time, we will provide it with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships,” added Bertelli, husband of Prada designer Miuccia Prada. The couple are leading shareholders in the company.

Donatella Versace also spoke in favour of the deal. “Gianni and I have always had a huge admiration for Miuccia, Patrizio and their family,” she said.

“I am honoured 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.

This acquisition is pivotal for more reasons than one as it occurs amid a backdrop of stalled mergers and IPOs due to a global equity market decline and recession concerns prompted by new tariffs imposed by US President Donald Trump earlier this month.

Since Prada's controversial purchases of Helmut Lang and Jil Sander in the late 1990s—described as "strategic mistakes" by prominent Prada shareholder Bertelli—the company has generally avoided significant acquisitions.

Prada's origins date back to 1913 when it was established as a leather goods store in Milan by the grandfather of designer Miuccia Prada.

On the other hand, Versace, founded in 1978 by Gianni Versace, is widely acclaimed for signature Barocco print. After Gianni's assassination in Miami in 1997, Donatella took on the creative leadership of the label.