Bloomberg reported that Italian fashion house Prada has agreed to acquire the Versace brand from Capri Holdings Ltd. for $1.38 billion.
The deal is said to be the largest in Prada’s 112-year history. It brings Versace back to Italy and strengthens Prada’s position in competition with luxury giants LVMH and Kering.
The final price may be adjusted during or after the deal closes based on estimates of Versace’s working capital and net debt. The deal is expected to close in the second half of the year.
In 2018, Capri Holdings Ltd. paid 1.8 billion euros ($2 billion) for Versace.
Although Versace is still a global name, the company is far from its heyday in the 1980s and 1990s.
Capri’s ambitions to double Versace’s revenue have failed. The brand’s style has lost popularity with some buyers, and price hikes have reduced the number of products available.
The company said the sale of Versace will strengthen Capri’s balance sheet, allow it to buy back some of its own shares, and allow it to focus investments on its largest brand, Michael Kors.
Shares fall
Capri shares fell 13% in New York trading on news of the Versace sale. The company’s shares have lost about 66% of their value over the past year.
Prada is going offensive in the mergers and acquisitions market after record results in 2024. Its Miu Miu brand, aimed at a younger audience, played a key role in revenue growth and helped the company weather the recent global downturn in the luxury fashion segment.
Capitalization gap
Even so, Prada’s value is only a fraction of the capitalization of its largest rivals. After shares fell about 32% from their record high in mid-February, Prada has a market value of about 14 billion euros. In contrast, LVMH is valued at about 264 billion euros.