Details of the Acquisition
Prada has struck a deal worth $1.38 billion to acquire smaller rival Versace from Capri Holdings. This move unites two prominent names in Italian fashion and aims to boost Prada’s revenue potential. While Versace has faced losses in recent quarters, Prada has managed to defy a slowdown in luxury demand.
Strategic Expansion
The acquisition is seen as part of Prada’s strategy to expand its footprint in the luxury industry. Prada, known for its minimalist style, aims to attract new customers with Versace’s bold, baroque-style prints. “There are no overlaps in terms of creativity, in terms of customers,” said Lorenzo Bertelli, Prada’s marketing director.
Strengthening Italy’s Luxury Industry
Prada’s acquisition strengthens Italy’s presence in the luxury sector, traditionally dominated by French conglomerates like Louis Vuitton owner LVMH. Prada Chairman Patrizio Bertelli expressed confidence in Versace’s future, saying, “We will provide Versace with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships.”
Geopolitical Risks and Market Volatility
Despite the uncertainty surrounding U.S. tariffs and market volatility, both Prada and Capri Holdings proceeded with the deal. Capri had to divest Versace to focus on its Michael Kors brand, while Prada sees the acquisition as a long-term growth strategy. The deal is expected to expand Prada’s revenue base rather than deliver immediate cost savings.
Management Changes and Future Outlook
The acquisition follows the announcement that Donatella Versace is stepping down as the brand’s chief creative officer. Donatella expressed her support for the new era at Versace, stating, “Gianni and I have always had a huge admiration for Miuccia, Patrizio, and their family.” The deal is expected to reshape Versace’s future under Prada’s leadership.