Prada Buys Versace For $1.38 Billion To Form Italy's Largest Fashion Group

Prada SpA agreed to buy Versace for about $1.38 billion in cash, strengthening its position as Italy's largest fashion group by adding one of the luxury industry's best-known brands.

The Milan-based company, controlled by billionaire designer Miuccia Prada and her husband Patrizio Bertelli, is buying Versace from Capri Holdings Ltd., which paid €1.8 billion ($2 billion) for the brand in 2018.

The purchase, the largest in Prada's 112-year history, returns Versace to Italian ownership and could put the company in a better position to compete with bigger luxury rivals such as LVMH and Kering SA. The deal also gives Versace a shot at the turnaround Capri hasn't been able to deliver.

“Versace is a well-known brand and should be complementary to Prada,” said Luca Solca, an analyst at Bernstein. Still, the label “requires huge investments.”

The agreement moved ahead despite the global market turmoil triggered by US President Donald Trump's tariff offensive. Prada has negotiated for months to buy the fashion house founded by Gianni Versace in the 1970s and known for its flashy, ready-to-wear designs. 

The final price may be adjusted at or after closing based on estimates of Versace's working capital and net debt, Prada said. The deal is expected to close in the second half of the year.

For Prada, which projects a more-subtle aesthetic than Versace, the acquisition adds diversity to its lineup and returns the company to the role of buyer after 1990s-eras deals — including for Jil Sander and Helmut Lang — burdened it with debt for several years. The design house went public through a 2011 IPO in Hong Kong.

“The acquisition of Versace marks another step in the evolutionary journey of our group, adding a new dimension, different and complementary,” Prada Chief Executive Officer Andrea Guerra said in the statement.

Versace's takeover by Prada runs counter to a decades-long trend of Italian fashion groups being acquired by foreign rivals. French conglomerate LVMH, which owns Louis Vuitton and Christian Dior, also has Italian brands including Fendi and Loro Piana. Kering owns Gucci and a stake in Valentino.

While still a global name, Versace is far removed from its heyday in the 1980s and 1990s. Capri also owns the Jimmy Choo label.

Capri's ambition to double Versace's revenue hasn't panned out. Its styles fell out of favor with some shoppers and price hikes reduced the number of affordable items. Disposing of Versace will strengthen Capri's balance sheet, enabling share repurchases, and allow it to invest in its largest brand, Michael Kors, the company said.

Capri shares fell as much as 13% in New York trading following the announcement. The stock is down by about 66% over the past year.

Prada is going on the M&A offensive following record 2024 results. Its Miu Miu label, which caters to younger consumers, has been instrumental in boosting the top line and helping the company weather the recent global downturn in high-end fashion. 

What Bloomberg Intelligence Says:

Prada's acquisition of Versace from Capri (almost $1.38 billion and 1.7x E/V to sales for fiscal 2025) is priced for historically weak two-year brand performance and subdued luxury-market demand this year vs. Versace's sale at 2.6x in 2018. Versace's luxury identity can be rekindled under Prada's ownership, with confidence boosted by brand success at Prada and Miu Miu, aided by robust cash generation. — Deborah Aitken and Andrea Ferdinando Leggieri

Still, Prada is worth a fraction of its biggest competitors. After its shares fell by about 32% from its mid-February record high, Prada is worth around €14 billion, compared with about €264 billion for LVMH.

The expansion comes amid a succession process in the Prada and Bertelli family, which owns 80% of the company.

Lorenzo Bertelli, the billionaire couple's eldest son, has already taken key ownership stakes as he gains experience in day-to-day operations by leading the marketing and sustainability units. His role was crucial in the Versace acquisition, according to people familiar with the matter who asked not to be named discussing private talks.

His mother Miuccia, the designer known for her “ugly chic” style, won't be involved in the creative direction of Versace, Lorenzo said. “Her involvement will be in the fact that she's the biggest shareholder of the company, but nothing in terms of creativity.”

Versace recently hired Dario Vitale, formerly of Miu Miu, as chief creative officer following the departure of longtime designer Donatella Versace.