Prada has acquired Italian luxury fashion house Versace for $1.38bn (£1.04bn), bringing the two historic design brands under common ownership at a price significantly lower than what Versace’s former parent company paid six years ago.
Deal value and regulatory approval
Prada said in a brief statement on Tuesday that it had completed the acquisition after receiving all required regulatory approvals. The purchase price of $1.38bn is well below the roughly $2bn that Capri Holdings paid to buy Versace in 2018.
Proceeds from the sale will be used by Capri Holdings to reduce its debt. Capri chief executive John D Idol said the company plans to use the funds to repay the majority of its outstanding borrowings, which he said would materially strengthen its balance sheet.
Strategic expansion for Prada
The acquisition adds Versace to Prada’s growing portfolio of luxury brands, which already includes Miu Miu. The move strengthens Prada’s position as it competes with large global rivals such as French luxury group LVMH, which owns brands including Louis Vuitton, Dior, and Fendi.
Prada chief executive Andrea Guerra said earlier this year that Versace has “huge potential,” adding that any turnaround would require long-term planning, careful execution, and patience.
Leadership transition at Versace
Donatella Versace stepped down as creative chief of the brand in March after 27 years in the role. She originally took over the company in 1997 following the murder of her brother, Gianni Versace.
She was replaced by Dario Vitale, who previously served as a design director at Miu Miu, Prada’s youth-focused luxury label.
Financial context under Capri Holdings
Versace is being sold at a loss of about $700m compared with its 2018 acquisition price. The brand’s sales slowed during Capri Holdings’ ownership, alongside the group’s other businesses, which include Michael Kors and Jimmy Choo.
During that period, Versace shifted away from its traditional ornate designs toward a more minimalist aesthetic, while also raising prices.
Featured image credits: Flickr
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