Prada Acquires Versace for $1.375 Billion to Reinvent Brand

The Prada Group has successfully completed the acquisition of luxury fashion house Versace for a total of $1.375 billion (€1.25 billion). This strategic move aims to revitalize Versace, which has struggled with performance in the post-pandemic market while under the ownership of Capri Holdings. The deal was finalized following the receipt of all necessary regulatory approvals.

Versace, renowned for its bold and sultry designs, will now operate alongside Prada’s distinctive “ugly chic” style and Miu Miu’s youthful appeal. The acquisition is expected to draw on the strengths of both brands, enhancing their individual market positions. Capri Holdings, which also owns Michael Kors and Jimmy Choo, indicated that the proceeds from the sale will primarily be used to reduce company debt.

In a heartfelt Instagram post, Donatella Versace, the brand’s creative director, expressed her excitement about the acquisition, coinciding with the birthday of her late brother, Gianni Versace. “Today is your day and the day Versace joins the Prada family. I am thinking of the smile you would have had on your face,” she wrote, sharing a nostalgic photo of Gianni Versace with Miuccia Prada.

Strategic Leadership for Future Growth

Lorenzo Bertelli, heir to the Prada legacy and currently the group’s marketing director, will take on the role of executive chairman of Versace. His leadership is anticipated to bring fresh perspectives while maintaining the brand’s core identity. Bertelli acknowledged that while no immediate executive changes are planned, Versace’s potential for growth remains significant, stating that the brand has “long been underperforming” in the industry.

Research analyst Luca Solca from Sanford C Bernstein noted the unique appeal of the acquisition, highlighting that the combination of Prada’s minimalist aesthetic with Versace’s maximalist flair means they do not compete for the same customer base. However, he emphasized the challenge ahead: “The challenge and the opportunity is to make it relevant again… They are going to have to invent something which is going to make the brand attractive, desirable and interesting again.”

Under new designer Dario Vitale, Versace has already begun its creative relaunch, unveiling a collection during Milan Fashion Week in September. While the runway show received mixed reviews, the collection—a vibrant homage to the 1980s—has garnered positive feedback from buyers, indicating a promising start for the brand’s new direction.

Financial Implications of the Acquisition

Capri Holdings had acquired Versace for $2 billion in 2018 but faced challenges in aligning the brand’s bold identity with the contemporary demand for “quiet luxury.” Chairman John D. Idol expressed confidence in Prada’s ability to guide Versace into a new era of growth, stating, “Prada is the ideal partner to guide this celebrated luxury house.”

Financial forecasts indicate that Versace will contribute approximately 13% to the Prada Group’s pro-forma revenues, while Miu Miu is projected to account for 22% and Prada itself for 64%. Last year, the Prada Group reported a 17% increase in revenues, amounting to €5.4 billion, underscoring the group’s robust financial health.

The Prada Group is also preparing to integrate Versace into its Italian manufacturing framework, further enhancing its competitive edge. Bertelli emphasized the importance of craftsmanship, stating, “Making a bag for one brand or another, the know-how is the same.” The group has committed €60 million to bolster its supply chain this year, which includes opening a new leather goods factory near Siena and expanding existing facilities.

With the acquisition now finalized, the fashion industry is poised to observe how the synergy between Prada and Versace unfolds, potentially setting the stage for a significant transformation in luxury fashion.