Prada has agreed to buy Versace from Capri Holdings for $1.375 billion, including debt.
The deal brings together two of Italy’s top fashion names.
Prada is expanding, having stayed strong despite a slowdown in luxury spending. Versace, in contrast, has posted losses in recent quarters.
The move boosts Italy’s presence in a luxury market often dominated by French groups like LVMH, owner of Louis Vuitton.
The deal comes shortly after Donatella Versace announced on March 13 that she was stepping down as chief creative officer of the brand her brother Gianni founded.
“We aim to continue Versace’s legacy celebrating and re-interpreting its bold and timeless aesthetic.
“At the same time, we will provide it with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships,” Prada Chairman, Patrizio Bertelli said.
Bertelli and designer Miuccia Prada, his wife, are the main shareholders.
Donatella Versace welcomed the deal, saying, “Gianni and I have always had a huge admiration for Miuccia, Patrizio and their family.
“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.”
Prada’s purchase price is lower than the $2.15 billion that Michael Kors (now Capri Holdings) paid in 2018. Media reports had expected a value of around $1.7 billion before recent market instability.
“This transaction reflects our commitment to increase shareholder value, strengthen our balance sheet and power the future growth of Michael Kors and Jimmy Choo,” Capri CEO, John Idol said.
Capri shares dropped 3% after the announcement and are down 24% this year.
Versace’s bold, baroque fashion contrasts with Prada’s minimalist style. Prada CEO Andrea Guerra said, “Versace has huge potential. The journey will be long and will require disciplined execution and patience.”
To finance the acquisition, Prada has taken on €1.5 billion in new debt.
This marks Prada’s biggest deal since its late 1990s acquisitions of Helmut Lang and Jil Sander, which Bertelli once called “strategic mistakes.”
Founded in 1913 as a leather goods store, Prada has grown under Miuccia and Bertelli, also owning Miu Miu and Church’s.
Versace, launched by Gianni in 1978 and known for its Medusa head logo, has been led creatively by Donatella since her brother’s death in 1997.
(CNN)
