Prada Buying Versace a Win-Win for Italian Luxury

After confirming the acquisition of Versace for 1.25bn Euros, Prada’s decision was both a business transaction as much as a symbolic repatriation of Italian heritage. As the dominance of French conglomerates LVMH and Kering has become the established order in luxury fashion-owning Italian crown jewels from Fendi to Gucci- the Prada Group’s countermove suggest a recalibration of power within the luxury industry.

The acquisition returns Versace to Italian ownership after its underwhelming chapter under American parent Capri Holdings, which paid 1.89bn Euros in 2019 but failed to realize its ambitious 2bn dollar revenue target. The substantial discount secured by Prada reflects both market realities and the arduous work that lies ahead.

The merger strengthens Ita’s hand in a luxury industry led by French conglomerates, the biggest being Louis Vuitton owner LVMH. “There are no overlaps in terms of creativity, in terms of customers.” Said Lorenzo Bertell, marketing director and a member of the family that controls Prada.

“We will provide (Versace) with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships,” Prada chairman Patrizio Bertelli said in a statement. Bertelli is the husband of Prada designer Miuccia Prada, and the couple are leading shareholders in the company.

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Prada and Capri have braved the uncertainty about US tariffs and market volatility to sign the deal, according to people familiar with the matter who spoke to The Associated Press.

Capri needed to divest Versace to focus on turning around its Michael Kors fashion brand, one of the sources revealed. For Prada, the bet on Versace comes at a time when it is looking to revive growth as its existing stable of brands start to mature, the source added.

Both Prada and Versace, which have global supply chains and boast of a widespread customer base, were willing to ‘swallow a bunch of geopolitical risk’ to get the deal done, the source said.

The fashion cognoscenti will recall Prada’s ambitious but ultimately unsuccessful acquisition strategy in the 1990s, when it purchased both Helmut Lang and Jil Sander in swift succession. Those ventures became cautionary tales in luxury management, as Prada struggled to navigate both the creative transitions following founder departures and the operational complexities of multi-brand stewardship.

The acquisition is a long-term project for Prada and is aimed mainly at expanding revenues rather than cost savings, Prada Chief Executive Andrea Guerra told analysts in a conference call.