Italian fashion house Prada SpA is in talks to acquire the Versace brand from Capri Holdings Ltd and is close to a deal, Bloomberg reports.
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Preliminary price and progress of negotiations
Sources familiar with the negotiations say the parties have already agreed on a preliminary value for the deal of around 1.5 billion euros (US$1.6 billion).
The deal is expected to be concluded in March. However, it should be noted that the terms can still be changed and the agreement itself can be disrupted.
Changing trend
If successful, the deal would set a precedent, breaking a decade-long trend of Italian fashion brands such as Gucci and Valentino being taken over by foreign conglomerates.
Silence from Capri and Prada, stocks rise
Capri, which acquired Versace in 2018 for 1.8 billion euros, has so far declined to comment. Prada also declined to make an official statement on the matter.
However, news of a possible deal has already had an impact on the market, with Prada shares rising 4.1% on the Hong Kong stock exchange. The potential acquisition of Versace would allow Prada to strengthen its position and increase competition with industry giants such as LVMH and Kering SA.
Market Cap Gap
Despite its potential expansion, Prada is still significantly smaller than the market leaders in terms of size. Prada's market capitalization is estimated at $22.5 billion, while LVMH's market value is around $347.5 billion to $362 billion.
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