Published by Global Banking and Finance Review
Posted on April 10, 2025
By Elisa Anzolin, Abigail Summerville and Amy-Jo Crowley
MILAN (Reuters) -Prada struck a $1.38 billion deal to buy smaller rival Versace from Capri Holdings on Thursday in a move that unites two of the biggest names in Italian fashion and offers the prospect of enhanced revenues.
Prada is seeking to expand, having defied a slowdown in luxury demand, while Versace has been operating at a loss in recent quarters.
Owning Versace, with its bold, baroque-style prints, will bring new customers to Prada, known for its minimalist style.
"There are no overlaps in terms of creativity, in terms of customers," said Lorenzo Bertelli, marketing director and a member of the family that controls Prada.
The merger strengthens Italy's hand in a luxury industry led by French conglomerates, the biggest being Louis Vuitton owner LVMH.
"We will provide (Versace) with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships," Prada Chairman Patrizio Bertelli said in a statement.
Bertelli is the husband of Prada designer Miuccia Prada, and the couple are leading shareholders in the company.
Prada and Capri braved the uncertainty over U.S. tariffs and market volatility to sign the deal, according to people familiar with the matter. Capri needed to divest Versace to focus on turning around its Michael Kors fashion brand, one of the sources said. For Prada, the bet on Versace comes at a time when it is looking to revive growth as its existing stable of brands start to mature, the source added.
Both Prada and Versace, which have global supply chains and boast of a widespread customer base, were willing to "swallow a bunch of geopolitical risk" to get the deal done, the source said.
The acquisition is a long-term project for Prada and is aimed mainly at expanding revenues rather than cost-savings, Prada Chief Executive Andrea Guerra told analysts in a conference call.
It follows the announcement on March 13 that Donatella Versace was stepping down as the chief creative officer of the brand founded by her late brother Gianni in 1978.
"Gianni and I have always had a huge admiration for Miuccia, Patrizio and their family," Donatella said. "I am ready to support this new era for the brand in any way that I can."
DISCOUNT PRICE
Capri Holdings' shares tumbled 9% in New York and are down nearly 30% since the start of 2025, with analysts noting the deal valuation was lower than expected.
The price Prada has agreed to pay for Versace, which includes debt, is a big discount to the roughly $2.15 billion including debt that U.S.-based Capri, then known as Michael Kors, paid for Versace in 2018 when it was sold by the Versace family and Blackstone.
Prada started to explore a deal for Versace last year when Capri's sale to Tapestry, whose brands include Coach and Kate Spade, was scrapped after being challenged by antitrust regulators, a second source said.
The purchase price of $1.4 billion for Versace barely changed since negotiations progressed seriously in January, the sources added.
"This transaction reflects our commitment to increase shareholder value, strengthen our balance sheet and power the future growth of Michael Kors and Jimmy Choo," said Capri CEO John Idol.
Prada said it had committed to 1.5 billion euros of new debt to fund the deal, which is expected to close in the second half of the year.
The deal comes at a time when several acquisitions and IPOs have been scuttled in the wake of a global equity sell-off and fears of recession triggered by U.S. President Donald Trump's new tariffs this month.
NEW DIRECTION
Since Prada's acquisitions at the end of the 1990s of Helmut Lang and Jil Sander, which leading Prada shareholder Bertelli called "strategic mistakes", the group has largely steered clear of major dealmaking.
The Versace acquisition marks a major shift in the group's strategy and comes two years after the appointment of Guerra at the helm, a role previously held by Patrizio Bertelli and Miuccia Prada. It also reflects the growing influence of Lorenzo Bertelli, their son, who is expected to become CEO in the future.
Prada traces its roots back to a leather goods shop founded in Milan by Miuccia Prada's grandfather in 1913.
The Versace label, known for its Medusa head logo, was founded by Gianni Versace in Milan. Donatella became its creative force following the killing of Gianni in Miami in 1997.
Listed in Hong Kong, Prada has expanded rapidly under Miuccia and Bertelli, owning other brands including the fast-growing Miu Miu and Church's shoes.
($1 = 0.8994 euros)
(Reporting by Elisa Anziolin in Milan and Abigail Summerville in New York and Amy-Jo Crowley in London;Writing by Keith WeirEditing by Matt Scuffham, Elaine Hardcastle, Susan Fenton and Leslie Adler)
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