Prada announced Tuesday that it has acquired Versace, bringing together two major Italian luxury fashion houses under one roof.
The $1.38 billion deal falls well short of the roughly $2 billion that Versace’s former parent company, Capri Holdings, paid for the brand in 2018.
The acquisition expands Prada’s portfolio of designer brands, including Miu Miu, as it looks to compete with rivals such as French conglomerate LVMH, which owns Dior and Fendi as well as Louis Vuitton.
Historic designer Donatella Versace stepped down as the brand’s creative chief in March after 27 years at the fashion company, known for its glamorous styles and iconic Medusa head logo.
He took over the company in 1997, after the murder of his brother Gianni. She was replaced by Dario Vitale, former design director of Miu Miu, Prada’s youth-focused luxury brand.
The company is being sold at a loss of about $700 million after Versace sales slowed, along with the sale of other Capri Holdings brands, including Michael Kors and Jimmy Choo.
During Capri Holdings’ ownership, Versace shifted from its recognizable ornate designs to embrace a more minimalist trend, while raising prices.
Prada said in a single-line statement on Tuesday that it successfully completed the acquisition of Versace, having received all required regulatory approvals.
Proceeds from the sale will help reduce debt at Capri Holdings, Versace’s former parent company, the firm said.
Capri chief executive John D Idol said: “We plan to use the proceeds to pay down the majority of our debt, which will substantially strengthen our balance sheet.”
Andrea Guerra, chief executive of Prada, said earlier this year that Versace has “enormous potential.”
“The journey will be long and will require disciplined execution and patience,” he said.
