Prada Group has agreed to buy Milan fashion rival Versace in an all-cash deal worth US$1.375 billion (C$1.93 billion) that brings the fashion house known for its sexy silhouettes under the same roof with Prada’s “ugly chic” aesthetic and Miu Miu’s youth-focused appeal.

The long-awaited deal is expected to reignite Versace’s fortunes, following a mediocre post-pandemic performance as part of US luxury group Capri Holdings.

Prada said in a brief statement that the acquisition was completed after receiving all regulatory approvals. Capri Holdings, which owns Michael Kors and Jimmy Choo, said the money would be used to pay down debt.

Donatella Versace welcomed the deal in a post on Instagram, which also marked the birthday of the brand’s late founder, her brother Gianni Versace.

“Today is your day and the day that Versace joins the Prada family. I’m thinking about the smile you would have on your face,” she wrote in the post, which included a photo of Gianni Versace with Miuccio Prada from 1996.

Versace’s future

Prada’s successor, Lorenzo Bertelli, is set to steer the next phase of Versace as executive chairman, in addition to his roles as group marketing director and head of sustainability.

The son of co-creative director Miuccia Prada and longtime Prada Group chairman Patrizio Bertelli said he doesn’t expect any quick changes in Versace’s executive leadership, though he also noted that the company, which is among the world’s 10 most recognizable brands, has long been underperforming in the market.

Prada emphasized that the 47-year-old Versace brand offers “significant untapped growth potential.”

The appeal of the deal is that it combines “minimalist Prada (with) maximalist Versace,” said Luca Solca, director of the luxury sector at research firm Sanford C. Bernstein, meaning the brands are not competing for the same customers.

Versace was “long past its prime,” Solca said. “The challenge and the opportunity is to make it relevant again… They’re going to have to invent something that makes the brand attractive, desirable and interesting again.”

Versace has already begun a creative reboot under new designer Dario Vitale, who presented his first collection during Milan Fashion Week in September. He was previously head of design at Miu Miu, but his move to Versace was unrelated to the Prada deal, executives said.

The runway show received mixed reviews, but the collection itself – a colorful, revealing riff on the 1980s – received good feedback from shoppers. “I think this seems like a promising first step,” Solca said.

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Separation from the past

Capri Holdings paid US$2 billion for Versace in 2018, but has struggled to position the brand’s bold profile in the recent era of “quiet luxury”.

Capri Holdings chairman John D. Idol said in a statement that “Prada is the ideal partner to lead this celebrated luxury house into the next era of growth.”

Versace represented 20 percent of Capri Holdings’ 2024 revenue of 5.2 billion euros (Cdn 8.4 billion).

Prada said when the deal was announced in April that Versace would represent 13 percent of the Prada Group’s pro-forma revenue, with Miu Miu 22 percent and Prada 64 percent. The Prada group, which also includes Church’s footwear, reported a 17 percent rise in revenue to 5.4 billion euros ($8.8 billion) last year.

The Prada group has already begun preparations to include international rival Versace in its Italian production system, a point of pride for the group.

“Making a bag for one brand or another, the know-how is the same,” Bertelli told reporters last week at the leather goods factory of the Scandicci group, which already produces bags for brands Prada and Miu Miu, and will soon add Versace.