Prada Thursday announced a landmark agreement to acquire Versace from Capri Holdings for €1.25 billion signifying the largest deal in the former’s 112-year history. The acquisition is poised to create a luxury group with revenues surpassing €6 billion, positioning Prada to better compete with French conglomerates LVMH and Kering.
The strategic move comes amid a global slowdown in the luxury sector, and is seen as a pivotal step for Prada to strengthen its standing in the market.
Prada CEO Andrea Guerra emphasized the strategic significance of this acquisition, stating, “The acquisition of Versace marks another step in the evolutionary journey of our Group, adding a new dimension, different and complementary.” Guerra further highlighted, “Versace has huge potential. The journey will be long and will require disciplined execution and patience.” These comments underscore Prada’s commitment to integrating Versace effectively into its portfolio.
Before the deal’s finalisation, there was speculation that Prada negotiated down the purchase price due to tariff-related pressures. In March, Prada reported a 15% increase in annual net sales, reaching €5.4 billion, further indicating its robust financial health amid the acquisition.
A key driver of Prada’s recent success has been its sister brand, Miu Miu, which recorded an impressive 93% surge in revenue last year. The acquisition of Versace, known for its maximalist designs, complements the minimalist aesthetics of Prada and Miu Miu, potentially stabilising cyclical performance.
The acquisition takes place during challenging times for luxury brands, many of which have been hit by reduced consumer spending. A temporary pause on tariffs against Europe offers a brief reprieve for the industry, allowing Prada to strategise and position itself for recovery. The acquisition not only defies current sector trends but also positions Prada advantageously for future growth.
Following the acquisition announcement, Prada’s shares rose nearly 5%, reflecting investor confidence in the company’s strategic direction. The acquisition is a testament to its strategic foresight, combining brands with distinct aesthetics to enhance market stability and competitive advantage.
