Italian fashion house Prada has agreed to acquire the Versace brand from Capri Holdings Ltd. for $1.38 billion, Bloomberg reports.
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It is noted that this agreement has become the largest in the 112-year history of Prada. It returns Versace to Italy and strengthens Prada's position in competition with the giants of the luxury industry – LVMH and Kering.
The final price may be adjusted at or after closing based on estimates of Versace's working capital and net debt. The transaction is expected to close in the second half of the year.
In 2018, Capri Holdings Ltd. paid 1.8 billion euros ($1.38 billion) for Versace.
While Versace is still a global name, the company is far from its heyday in the 1980s and 1990s.
Capri's ambition to double Versace's revenues has not materialized. The brand's style has fallen out of favor with some shoppers, and price increases have reduced the number of items available.
The sale of Versace, the company said, will strengthen Capri's balance sheet, allow it to buy back some of its own shares and focus investments on its largest brand, Michael Kors.
Stocks Fall
Capri shares responded to the news of the Versace sale by falling 13% in New York trading. Overall, the company's shares have lost about 66% of their value over the past year.
Prada is on an M&A offensive after record results in 2024. Its younger-focused Miu Miu brand has played a key role in its revenue growth and helped the company weather the recent global downturn in luxury fashion.
Capitalization gap
Despite this, Prada is worth a fraction of its biggest rivals. After shares have fallen about 32% from their mid-February record, Prada's market value is about €14 billion, while LVMH is valued at about €264 billion.
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