Prada in Talks to Acquire Versace in a Potential €1.5 Billion Deal

Luxury fashion house Prada is reportedly in discussions to acquire Versace from its current owner, the U.S.-based Capri Holdings, in a deal that could be worth up to €1.5 billion (£1.2 billion), according to Reuters. The potential sale would bring Versace back under Italian ownership, strengthening Prada’s position as it seeks to compete with French luxury conglomerate LVMH.

As reported by Bloomberg, the Milan-based Prada and New York-listed Capri could finalize an agreement as soon as this month, though the outcome remains uncertain as negotiations continue. Should the acquisition go through, it would mark a significant shift for Versace, which has been under Capri’s ownership since 2018.

Financial Challenges and Market Position

A sale at the rumored price of $1.5 billion would represent a financial loss for Capri Holdings, which originally acquired Versace for $2.1 billion. The Italian fashion brand has faced challenges in recent years, with Capri recently reporting a 15% decline in Versace’s revenues, down to $193 million in the final quarter of 2024. The brand is expected to post losses this financial year, though it is projected to break even in the next.

According to Reuters, Versace’s struggles are partly due to its product lineup, which lacks high-performing categories such as luggage—an area that has remained resilient for brands like Louis Vuitton during economic downturns. Questions also linger over the future leadership of the brand, particularly whether Donatella Versace will continue her role as creative director, a position she has held since the death of her brother, Gianni Versace, in 1997.

Prada’s Growth Strategy

Founded in 1913 by Mario Prada, the Italian fashion house has been led by his granddaughter, Miuccia Prada, since the 1970s. The acquisition of Versace would bolster Prada’s growth ambitions, potentially increasing its competitiveness in the luxury fashion sector. Per Reuters, Miuccia Prada recently acknowledged the ongoing discussions, stating at Milan Fashion Week that the deal was “on everyone’s table.”

Prada has reportedly completed its initial due diligence and now has access to Versace’s financial and sales data, a key step in the negotiation process, according to Bloomberg. Meanwhile, Capri Holdings has expressed optimism about Versace’s long-term potential, despite its recent financial difficulties. The company forecasts sales to drop slightly from $810 million in the current financial year to $800 million next year, before rebounding to $900 million by 2028 and eventually reaching $1.5 billion.

If the deal proceeds, Prada’s expansion could reshape the landscape of the luxury fashion industry, bringing one of Italy’s most iconic brands back under domestic ownership and positioning Prada as a stronger competitor against global giants like LVMH.

Source: Reuters