Italian Fashion Powerhouse: Prada to buy Versace

Prada said Thursday that it had reached a deal to buy Versace for 1.25 billion euros ($1.38 billion), building a new Italian fashion powerhouse and hoping to insert much-needed "spark" into its smaller, flashier rival.

The much anticipated acquisition, from US group Capri Holdings, will create a group with revenues of over six billion euros that could better compete with giants such as the French conglomerates LVMH and Gucci owner Kering.

"We are delighted to welcome Versace to the Prada Group and to build a new chapter for a brand with which we share a strong commitment to creativity, craftmanship and heritage," Prada Group chairman Patrizio Bertelli said.

Italian fashion designer Miuccia Prada poses with her Outstanding Achievement award during the British Fashion Awards 2018 in London on December 10, 2018. Italian fashion house Prada announced on April 10, 2025 that it had reached a deal with US group Capri Holdings to buy Versace for 1.25 billion euros ($1.39 billion). The acquisition will create a luxury group with revenues of over 6 billion euros, which could better compete with industry giants such as the French conglomerates LVMH and Kering amid a slowdown in the sector worldwide.AFP

In 2018, Capri paid 1.83 billion euros (then $2.1 billion) to acquire Versace, which was previously owned 80 percent by the Versace family and 20 percent by the US investment fund BlackRock.

But amid declining sales, it sought a buyer, opening exclusive negotiations with Prada at the end of February.

Capri, which also owns Jimmy Choo and Michael Kors, had to accept a reduced price from Prada amid the market turmoil caused by US President Donald Trump's tariffs.

The Financial Times reported that the price was initially expected to be about $1.6 billion but had recently been negotiated downwards.

Donatella's departure

Last month, Donatella Versace stepped down as creative director after over 30 years, a move widely seen as a prelude to the accord.

She took over in 1997 following the murder of her older brother Gianni, who founded the label in 1978.However, on April 1, Dario Vitale replaced her as creative director, overseeing soaring sales at Miu Miu, Prada's sister brand, which targeted a younger clientele.

Donatella will now serve as Versace's chief brand ambassador.

While still a label associated with the jet set, some of Versace's luster has faded recently.

Fashion designer Donatella Versace acknowledges applause following the Versace women's Fall/Winter 2019/2020 collection fashion show, on February 22, 2019 in Milan. Italian fashion house Prada announced on April 10, 2025 that it had reached a deal with US group Capri Holdings to buy Versace for 1.25 billion euros ($1.39 billion). The acquisition will create a luxury group with revenues of over 6 billion euros, which could better compete with industry giants such as the French conglomerates LVMH and Kering amid a slowdown in the sector worldwide.AFP

According to Prada, Capri had expected turnover to fall to $810 million during its 2025 fiscal year, down from $1.03 billion a year earlier.

By contrast, Prada, under the creative helm of Miuccia Prada, the 76-year-old granddaughter of group founder Mario, is in robust health.

Despite a global slowdown in luxury good sales in recent years, Prada's net profit jumped 25 percent to 839 million euros in 2024, on revenues that grew 15 percent to 5.4 billion euros.

Prada's group chief executive Andrea Guerra said Thursday that Versace had "huge potential" but warned there was work to do.

"The journey will be long and require disciplined execution and patience," he said.

The deal, funded through 1.5 billion euros of new debt, is expected to close in the second half of 2025.

For its part, Capri said the sale would allow it to step up investments in Michael Kors and strengthen its balance sheet.

Italian fashion designer Donatella Versace attends the 2024 Kering Foundation's Caring for Women dinner in New York City on September 9, 2024. Italian fashion house Prada announced on April 10, 2025 that it had reached a deal with US group Capri Holdings to buy Versace for 1.25 billion euros ($1.39 billion). The acquisition will create a luxury group with revenues of over 6 billion euros, which could better compete with industry giants such as the French conglomerates LVMH and Kering amid a slowdown in the sector worldwide.AFP

No revolution

The two fashion labels have starkly different styles, with Versace's exuberance contrasting with Prada's sophisticated minimalism.

Prada said its new acquisition "constitutes a strongly complementary addition" to its portfolio and promised to "maintain its creative DNA and cultural authenticity".

"I don't think we need to change the brand, to revolutionize it," Prada's marketing director, Lorenzo Bertelli, told analysts during a conference call.

"We need just to evolve it... all together, they're going to make, hopefully, a huge spark and bring back Versace to be a huge success."

Bertelli, the eldest son of Miuccia Prada and Patrizio Bertelli, is expected to take over one day. He said his mother would not have creative involvement in Versace.

Miu Miu Italian fashion designer Miuccia Bianchi Prada acknowledges the audience at the end of her show as part of the Paris Fashion Week Womenswear Spring/Summer 2024 in Paris on October 3, 2023. Italian fashion house Prada announced on April 10, 2025 that it had reached a deal with US group Capri Holdings to buy Versace for 1.25 billion euros ($1.39 billion). The acquisition will create a luxury group with revenues of over 6 billion euros, which could better compete with industry giants such as the French conglomerates LVMH and Kering amid a slowdown in the sector worldwide. AFP

Core business

The deal bucks the trend of recent years, which has seen significant names in Italian fashion such as Gucci, Fendi, and Bottega Veneta fall under the control of their French competitors.

However, a previous attempt to expand the Prada portfolio—including luxury footwear brands Car Shoe and Church's—offers a cautionary tale.

In 1999, the family group acquired the German brand Jil Sander and the Austrian label Helmut Lang before selling them in 2006 as they weighed down its financial results.

In 2000, Prada jointly acquired a 51 percent stake in the Roman label Fendi with LVMH, but sold its 25.5 percent stake to the French luxury giant a year later.

With the Versace acquisition, "I see a risk for Prada to become distracted from its core business," Luca Solca, an analyst at Bernstein, told AFP.