Prada Group to Buy Versace for €1.25 Billion

Prada Group has agreed to acquire Versace from Capri Holdings for €1.25 billion ($1.38 billion), after negotiating a discount of more than €200 million due to the impact of US president Donald Trump’s trade war.

Prada, which is financing the transaction with new debt, is borrowing an additional €250 million to invest in relaunching Versace, which turned loss-making last year as it struggled to keep up with bigger heritage brands amid a global downturn in luxury sales.

The deal is going ahead despite a global market rout sparked by Trump’s trade policy, which risks hammering demand for high-end products in addition to clouding the outlook for fashion’s global supply chain. Shares in Michael Kors and Versace parent Capri tumbled 36 percent in a week, before partially recovering Wednesday after Trump announced a pause on the heftiest tariffs on imports from all countries except China.

In spite of a volatile market that is likely to pinch both strong brands like Prada and struggling rivals like Versace, Prada Group decided not to pass up the chance to add one of Italy’s most famous brands to its stable.

The deal is expected to close in the second half of 2025.

Turning around Versace, whose business has never matched the power of its brand, will be a challenge for the group controlled by Miuccia Prada and her husband Patrizio Bertelli, but could provide a new avenue for growth beyond its flagship Prada brand and Miu Miu sister label, as well as help to fend off consolidation by French groups LVMH and Kering.

“This is a brand with a huge potential, a strong heritage and a very recognisable aesthetic,” group chief marketing officer Lorenzo Bertelli said in a call following the announcement.

Prada Group CEO Andra Guerra emphasised that Versace’s relaunch would be a “very long-term” effort, but expressed confidence in achieving “sustainable growth” after onboarding its “brand, image, products, stores and people” to Prada Group’s industrial platform and corporate structure.

Versace’s estimated revenues fell 19 percent to $810 million in the fiscal year through March, Capri said. That’s roughly in line with the size of the business when the American group acquired it for $2.1 billion in 2018. The brand is hoping to break even by March 2026 after operating margins swung to a high single-digit loss over the past year.

Last month, Versace named a new artistic director hired from Prada’s Miu Miu label, Dario Vitale, to help revamp its collections. Vitale is a seasoned operator whose fresh creative vision could revive interest in a brand that’s been designed by former creative director Donatella Versace since 1997.

On the other hand, industry sources say the designer’s exit from Prada Group was fraught. And Vitale’s appointment could raise concerns among executives that his Versace will cannibalise sales of fast-growing Miu Miu.

Asked whether the group was pleased to reunite with Vitale as a trusted pair of hands leading Versace, Guerra declined to comment, expressing his eagerness to work with “all of Versace’s people.” The fate of the brand’s current CEO, Emmanuel Gintzberger, also remains unclear, as Guerra confirmed only that the company would “start” its Versace journey with him.

The deal will test recent efforts to financialise and professionalise Prada’s governance and operations. Over the past five years, the Milan-based firm has sought to accelerate its succession plans, bringing in a new CEO, CFO and deputy chairman as founders Prada and Bertelli relinquished their co-CEO titles. The group fast-tracked the career of the couple’s heir apparent, Lorenzo, who has taken on the role of group CMO in addition to serving as head of corporate responsibility and social responsibility and on the company’s board.

Star designer Raf Simons joined the company as co-creative director of Prada, alongside Miuccia Prada, in 2020.

“Our organisation is ready and well positioned to write a new page in Versace’s history,” chairman Patrizio Bertelli said in a statement.

Prada Group’s sales have continued to grow despite a downturn in the overall luxury market. Revenues rose 15 percent to €5.4 billion last year. Expansion was driven principally by Miu Miu, whose retail sales nearly doubled.

At Capri, investors welcomed recent months’ reports that the group aimed to shed its Versace and Jimmy Choo businesses in order to focus on turning Michael Kors around, after a plan to sell the group to Coach-owner Tapestry fell through last year. US anti-trust authorities blocked the previous deal saying it would hurt consumers by making the country’s handbag market insufficiently competitive.

Prada negotiated further discounts to Versace’s price amid the current market rout. At €1.25 billion, Capri is selling Versace for far less than the $2.1 billion it paid for the brand in 2018.

But the opportunity to reduce its net debt of $1.12 billion while getting a loss-making unit off its balance sheet likely enticed the group’s board to accept a deal. In February, Fitch downgraded its rating for Capri’s debt to BBB, just a notch above what would be considered junk.

Versace was founded in 1978 and became a staple of glitzy pop luxury in the 1980s and ‘90s. Donatella Versace took over leadership of the company following her brother Gianni’s murder in 1997, and continued to serve as its creative director following its 2018 sale to Capri.

On Instagram Thursday, she said, “Gianni and I have always had a huge admiration for Miuccia, Patrizio and their family. I am honoured to have the brand in the hands of such a trusted Italian family business and I am ready to support this new era for the brand in any way that I can.”

The Versace deal won’t be the first time Prada tried its hand at forging a multi-brand group. In the late ‘90s, after years of Italian business leaders looking on in horror as French conglomerates scooped up the country’s most famous brands, Prada Group acquired Jil Sander, Helmut Lang and a significant stake in Fendi.

The company sold off its Fendi stake in 2001 as the aftermath of Sept. 11th terror attacks roiled markets. Chairman Bertelli locked horns with the founders of Jil Sander and Helmut Lang, and ultimately sold both brands after a few years of struggling to put a succession plan in place.