Prada acquires Versace for $1.38 billion: What's next?

Wildly popular Italian fashion brand Prada has acquired Versace, another luxury fashion brand of Italian roots, in a $1.38 billion (£1.04 billion) deal.

The amount at which the Prada-Versace deal was struck is said to be significantly lower than the approximately $2 billion paid by Capri Holdings, Versace's former parent company, in 2018.

Prada's plans with Versace acquisition?

As per reports circulating online, Versace's acquisition by Prada would enhance its portfolio, which already comprises Miu Miu, and the fashion giant aims to compete with rivals like LVMH, owner of Dior and Fendi.

Donatella Versace, the brand's creative chief for the past 27 years, stepped down in March. She took over after her brother Gianni’s tragic murder in 1997 and was succeeded by Dario Vitale, previously a design director at Miu Miu.

An intriguing aspect of the deal is that Versace is being sold at a loss of about $700 million, following a decline in sales and Capri Holdings' struggles with other brands under its belt, including Michael Kors and Jimmy Choo.

Under Capri's ownership, Versace reportedly shifted from its signature ornate designs to a more minimalist style while increasing prices.

Prada confirmed the successful completion of the acquisition after receiving all necessary regulatory approvals. Capri’s CEO, John D. Idol, stated, "We plan to use the proceeds to repay the majority of our debt."

On the other hand, Prada CEO Andrea Guerra said Versace has "huge potential," emphasising that "the journey will be long" and will require careful execution.