Prada in Talks to Acquire Versace in Multi Billion Euro Deal

Prada, the Milan-based luxury fashion house, is in advanced discussions to acquire Versace, an iconic Italian brand currently owned by US-based Capri Holdings. The reported deal is expected to reach up to €1.5 billion and could bring Versace back under Italian ownership after several years under foreign investment. Sources suggest that the acquisition could be completed this month, although negotiations are still ongoing and could yet fall through.

Capri Holdings, formerly known as Michael Kors, acquired Versace in 2018 for $2.1 billion. However, in recent years, the Italian fashion house has struggled to maintain profitability, with revenues falling significantly. For the final quarter of 2024, Versace reported revenues of $193 million, representing a 15% decline year-on-year. Capri projects that Versace will be loss-making throughout this financial year, though it aims to break even the following year, with hopes of achieving annual sales of $1.5 billion in the long term.

Prada has reportedly conducted due diligence and gained access to Versace’s latest financial and sales data to evaluate the value of the brand. While Capri has expressed optimism about Versace’s growth potential, it continues to face operational challenges, including fierce competition from French luxury conglomerates such as LVMH, which owns leading labels including Louis Vuitton and Dior. The acquisition would significantly expand Prada’s portfolio, solidifying its position against these European luxury giants.

Currently, questions remain about the future leadership of Versace. Donatella Versace, the brand’s creative director since the tragic death of her brother Gianni in 1997, plays a central role in the company’s identity. Her continued involvement may be reviewed as part of the transition to new ownership by Prada.

Capri Holdings, which also acquired shoemaker Jimmy Choo in 2017, has faced broader financial pressures. Its debt rating was recently downgraded by S&P Global Ratings, citing challenges in managing borrowing levels alongside operational performance. Additionally, in 2024, a proposed $8.5 billion merger with Tapestry, the parent company of Coach, was blocked by US competition regulators. These events have prompted strategic reviews of Capri’s holdings, leading to the potential divestment of Versace.

News of the talks sent Prada’s Hong Kong shares up by 3.5% on Monday, reflecting investor confidence in the strategic value of this acquisition. If completed, the deal would mark another significant development within the competitive world of luxury fashion, as brands vie for dominance in an increasingly challenging global market.