Prada Acquires Versace at Discounted Price

Prada has officially acquired Versace for $1.38 billion (£1.04 billion). This deal marks a significant shift in the luxury fashion landscape, bringing two prestigious Italian brands together. The acquisition price is notably lower than the approximately $2 billion that Versace’s previous owner, Capri Holdings, invested in 2018.

Strategic Expansion in Luxury Fashion

With this acquisition, Prada enhances its portfolio, which already includes Miu Miu. This move is part of Prada’s strategy to compete against dominant players like LVMH, known for brands such as Dior, Fendi, and Louis Vuitton.

Leadership Changes at Versace

The transition at Versace comes amid significant changes in leadership. Donatella Versace, who served as the creative head for 27 years, stepped down earlier this year. She took the reins of the company following the tragic death of her brother, Gianni, in 1997. Dario Vitale, the former design director of Miu Miu, will now lead Versace’s creative direction.

Financial Context of the Acquisition

This acquisition represents a considerable financial loss for Capri Holdings, resulting in a loss of approximately $700 million. Under Capri’s ownership, Versace pivoted from its traditional ornate styles to a more minimalist aesthetic, accompanied by increased prices. However, this strategy did not yield the desired sales growth.

• Acquisition Price: $1.38 billion
• Initial Investment by Capri Holdings: Approximately $2 billion in 2018
• Loss on Sale: $700 million

Plans for Debt Reduction

Capri Holdings plans to utilize the proceeds from this sale to significantly reduce its debt. CEO John D. Idol emphasized that repaying the majority of their debt will strengthen the company’s balance sheet.

Future Prospects for Versace

Prada’s CEO, Andrea Guerra, highlighted the potential within Versace. He stated that the journey to revitalizing the brand would require patience and disciplined execution. This acquisition aims to reinvigorate Versace and solidify Prada’s position in the competitive luxury market.