Prada to buy Versace for Nearly $1 Billion
On Thursday, in the biggest luxury deal of the year, Prada announced it was buying Versace for 1.25 billion euros ($1.38 billion) from Capri Holdings, a beleaguered New York group that at one point styled itself as the American answer to the great fashion groups of France.
The deal is a sign of faith in the continued value of Made in Italy at a time when the financial markets are in chaos because of President Trump’s whipsawing tariff policies. And it marks the end of Capri’s attempt to create an American luxury group to rival LVMH and Kering, while signaling an attempt by Prada to create an Italian competitor to the powerhouses.
“It’s a bold and ambitious move by Prada,” said Robert Burke, the eponymous founder of Robert Burke Associates. “The acquisition would position Prada to diversify its portfolio and compete on a larger global stage.”
Versace will join Prada and Miu Miu, as well as Luna Rossa, the America’s Cup sailing team, and the pastry brand Marchesi as part of the Prada Group, creating a “best in class” mosaic of Italian savoir-faire. The group also includes footwear brands Car Shoe, Church’s and Luna Rossa. Andrea Guerra, the chief executive of the Prada Group, said in a press release that the acquisition would bring “a new dimension to the Group, one that is different and complementary.” The Prada Group plans to borrow more than one billion euro in order to finance the acquisition. The plan was approved by both companies’ boards and they expect the deal to close in the second half of the year, pending approval by regulators.
The Prada Group has been the rare success story during a general downturn in the luxury market, reporting 2024 revenues of EUR5.4 billion, a 17 percent increase, driven in part by the tremendous recent success of Miu Miu, which experienced retail sales growth of 93 percent last year.
By contrast, in its most recent financial report Capri, which also owns Michael Kors and Jimmy Choo, said it expected Versace revenues to drop to $810 million in its current fiscal year, from $1 billion in 2024. Versace was seen as a possible acquisition target after the Federal Trade Commission blocked an attempt by Tapestry to acquire Capri, which includes Coach and Kate Spade. The rumor that Prada might also buy Jimmy Choo due to its leather goods expertise was not confirmed. “The Versace business needs a complete turn-around,” said Luca Solca a senior analyst at the research firm Bernstein. At the same time, he added, Prada’s track record with acquisitions “leaves much to be desired.”
Indeed, the Versace takeover is not Prada’s first try to extend its winning formula to other brands. Prada, which had helped define Italian fashion for a decade, went on a shopping spree in 1999. It bought Jil Sander, Helmut Lang and other brands that shared a similar intellectual approach to dressing. The alchemy Miuccia Prada, her husband Patrizio, Bertelli, created at Prada, however, was not transferable. The group sold Lang in 2005 and it divested Sander the following year.
Versace will give them the opportunity to rewrite that narrative.
Prada and Versace are, on the surface, a study in contrasts. Versace’s success was built on a celebration and fantasy of sun, sex and the male gaze, and a tightrope walk between bad taste and elegant. Prada, on the other hand, explored the meaning of femininity and gender politics, as well as the strange allure that is ugly chic. Mr. Bertelli stated in a news release that “we share a commitment to creativity, workmanship and heritage,” and also a belief in family. Prada is close with Donatella Versace who took over the company that her brother Gianni founded after his death in 1997. Ms. Versace has left her position as chief brand ambassador after almost 30 year, but she remains the chief brand ambassador and has always felt a sense of responsibility for ensuring the future of Gianni’s legacy. She is said to be “delighted” that her brand is back in the family’s hands. Lorenzo Bertelli is the chief marketing officer of the company and is considered to be the heir apparent. The company was founded in 1913, by Mrs. Prada’s grandfather, by Mr. Bertelli. Even Dario Vitale, the designer who took over Ms. Versace at Versace after she left, spent 14 years working at Miu Miu with Mrs. Prada, who is the creative director of Miu Miu, and co-creative Director of Prada along with Raf Simons. He eventually rose to become her second in charge before moving to Versace. He is essentially returning home.
Capri has a much more recent history. The group was formed in 2018 after Michael Kors acquired Versace for $2.1billion, following its purchase of Jimmy Choo. John Idol, chief executive of Michael Kors, bragged at the time that the Versace deal was “our latest step towards creating one of the leading fashion and luxury group in the world.”
Now, Mr. Guerra from Prada may say something similar.
