Prada's $1.38 Billion Acquisition of Versace

Company Details: Acquirer – Prada Group

Prada was founded in 1913 by Mario Prada in Milan, where it remains headquartered. Prada has been listed on the Hong Kong Stock Exchange since June 2011 and has a market capitalization of $11.46bn as of November 23, 2025. The CEO of Prada is Andrea Guerra and they were advised by Skadden, Arps, Slate, Meagher & Flom LLP in the transaction.

Originally, Prada sold bags, trunks and travel accessories when it first opened in the Galleria Vittorio Emanuele II in Milan. It has now expanded into being one of the luxury fashion industry’s most recognizable names. Today, Prada designs and manufactures ready-to-wear clothing, leather goods, footwear and jewellery. Prada also participates in the eyewear and beauty sectors through strategic investments.

The Prada Group is a powerhouse in the industry and encompasses many well-known brands including Prada, Miu Miu, and Church’s, among others. Prada operates both physical retail stores and e-commerce sites, as well as being available in select department stores. The Prada Group is focused on promoting creativity and sustainability across its brands with particular emphasis on “innovation, transformation and independence” in the luxury fashion industry.

Despite the slowdown in the global luxury market, Prada has outperformed the market with a 9% increase in sales in the first half of 2025 alone. Moreover, Miu Miu has experienced 58% year-on-year growth.

Company Details: Target - Versace

Versace was founded by Gianni Versace in 1978 in Milan and remains headquartered there. Versace immediately rose to become a leader in the fashion industry, and the brand saw immense success in the 80s and 90s. Versace’s CEO is Emmanuel Gintzburger and they were advised by Wachtell, Lipton, Rose & Katz in the transaction.

Versace’s success was largely owed to its bold and opulent style coupled with the marketing strategy of aligning the brand with celebrities including the likes of Madonna and Princess Diana. Versace’s essence centres on freedom through limitless self-expression and inspired by Mediterranean values epitomized by the house’s classicism. Versace’s branding is often recognized by its Medusa logo representing the face of an empire unafraid of excess and indulgence.

After Gianni Versace’s assassination in 1997, sister Donatella Versace took over as artistic director of the brand, helping expand its prowess into new sectors. When Donatella Versace took over, she expanded the brand into accessories, home goods and hotels, transforming Versace into a lifestyle brand. In 2018, Versace was acquired by Capri Holdings for $2.1bn. Versace operates both physical retail stores and e-commerce sites.  

The Acquisition

Prada’s planned acquisition of Versace (the “Acquisition”) was announced in April 2025 and is expected to close by the end of 2025. Capri put Versace up for sale after the U.S. Federal Trade Commission (the “FTC”) blocked Versace’s proposed merger with Tapestry (owner of brands like Coach).

Prada views Versace’s growth potential and complementary aesthetic as key motivations behind the Acquisition. The complementary aesthetic refers to the mix of Versace’s provocative, and Medusa inspired designs and Prada’s more understated elegance. It allows Prada to diversify its offerings by acquiring a brand whose identity is so creatively different.

The Acquisition and Capri’s prior efforts to sell Versace come in the wake of Versace’s significant decline in revenue. In early 2025, Capri reported that Versace’s revenue declined by 15% from the previous year and that sales had dropped by over 20% in the Americas and 10% in Asia indicating the impact of the luxury market downturn on the brand. Capri CEO John Idol had noted several misjudgements on Versace’s part as reasons for its decline in revenue (including reducing the offerings of entry-level priced items and leaning too much into the “quiet luxury” trend which was diametrically opposed to its signature bold style). On November 4, 2025, Vogue reported that Capri’s revenues declined by 4.2%. 

Under the agreement, Prada will acquire 100% of Versace from Capri Holdings for $1.38bn in cash. The deal was approved by both entities’ boards and is expected to close by the end of the year pending necessary regulatory approvals. The acquisition price was the result of lengthy negotiations: Versace was originally valued at $1.6bn but its value dropped in the face of U.S. tariff policies which reduced Capri’s market capitalization to $1.5bn. This put a downward pressure on the valuation price. Capri Holdings had initially acquired Versace for $2.1bn in 2018 but had forecasted an $810M decline in revenue. Capri had previously attempted to sell Versace for $3bn but this failed when creative director Donatella Versace left the brand in March 2025. She was replaced by Miu Miu design and image director Dario Vitale but will remain tied to Versace in a new role as chief brand ambassador.

Prada is funding the deal with $1.6bn in new debt. This is the biggest acquisition for Prada Group since its IPO. The Acquisition also created Italy’s first homegrown luxury conglomerate. Prada views the deal as a strategic investment to revive Versace’s underperforming sales and to generate long-term sustainable value. Capri will utilize the proceeds to accelerate investment into its remaining brands (notably Michael Kors and Jimmy Choo).

The transaction requires antitrust approval in multiple jurisdictions (the EU, U.S. and parts of Asia). In late September 2025 the European Commission approved it as not raising competition concerns. Prada’s acquisition of Versace has not been blocked by the FTC, despite anticipation of such. This is contrast to the FTC’s blocking of proposed merger between Tapestry and Capri in 2024. This is likely since the Tapestry Capri merger was blocked due to concerns of hurting the accessible luxury market. Prada acquiring Versace does not necessarily spark similar concerns of reducing competition in the luxury fashion market, some view the merger as helping the two Milanese brands join forces to combat French competitors in the industry.

Impact

The Acquisition consolidates two iconic Milanese luxury brands under the Prada Group. Thus far, the market has reacted positively, viewing it as a strategic deal which can mitigate risk for both brands amid a turbulent time in the industry. Many have praised Prada for acquiring Versace at a significant discount, specifically 34% lower than what Capri Holdings had acquired it for. Prada has taken advantage of market volatility to secure an asset with strong value in its historic brand prowess despite its recent struggles. The Acquisition cements Prada as the Italian leader in the luxury fashion market, which has largely been dominated by French brands like Louis Vuitton Moet Hennessy and Kering. 

The European Commission’s greenlighting of the deal was a big win for the parties. The Commission cited the two companies’ limited market positions as failing to raise competition concerns. Some experts highlighted the significance of Prada strengthening its position in the industry as an important means of protecting Italian heritage. Others have noted that the brands traditionally cater to different consumer bases which contributes to the finding of the Acquisition not hindering competition.

Future Outlook

Concerns for the future revolve around the uncertainty of the U.S. tariffs regime and Prada’s need to deliver synergies quickly due to having funded the deal through debt. Versace needs a quick turnaround to become profitable, and this will depend on how effectively the Prada Group can integrate Versace and create synergies. These challenges are exacerbated by the declining demand in key luxury markets like China and the U.S.

Can Versace’s bold aesthetic be seamlessly integrated with Prada’s more understated sophistication? Will clashes between the two brand’s identities pose business challenges? Only time will tell. With the new year fast approaching, the short-term impacts of the Acquisition will soon come to fruition. Hopefully they will spell renewed sustainable growth for Versace and prove for a beneficial relationship between both brands.

The Acquisition, to me, presents the potential for a very strong case study in favour of consolidating brands with common cultural identity, albeit very divergent aesthetics. One of the most often repeated benefits of the Acquisition is the opportunity it presents to strengthen competition against other conglomerates in the industry. Major rival and industry titan LVMH (who house 75 different brands across different sectors, with 16 in fashion) routinely acquires brands, expanding its foothold in the industry and has even been faced with scrutiny and fines in the EU for its anti-competitive practices in 2025. The Prada Group, by comparison, houses only six brands. Bringing another iconic Italian brand under its care is not only economically strategic but allows Prada to position itself as “the” Italian luxury conglomerate whilst reviving a culturally significant fashion house. And on the fashion side of things? We can only hope that Prada will not cramp Versace’s style, literally.