The Prada Group announced a deal Thursday (April 10) to buy crosstown Milan fashion rival Versace from the US luxury group Capri Holdings under terms that values one of the most recognisable names in Italian fashion at €1.25bil (approximately RM6.26bil).
The deal will put Versace, known for sexy silhouettes and bold Greco and Medusa motifs, under the same roof as Prada’s "ugly chic” aesthetic and the youth-driven Miu Miu whose stunning growth in recent years has far outpaced the market.
Prada said the 47-year-old Versace brand offered "significant untapped growth potential".
"This is exactly the strength for our group. There are no overlaps in terms of creativity, in terms of customer,″ said Lorenzo Bertelli, Prada’s chief marketing officer, who is being groomed to one day take over the business that his parents – Miuccia Prada, the group's creative force and largest shareholder, and Patrizio Bertelli, its chairman and executive director – have turned into a global fashion juggernaut.
"We are buying a brand with huge potential, with a very recognisable aesthetic," Lorenzo said, underlining that the Versace brand name recognition, putting it among the top 10 in the world, far outweighs its business performance.
The final value of the deal will be adjusted at closing, which is expected in the second half of the year, the Prada Group said.
It will be funded by €1.5bil (RM7.5bil) in new debt and has been approved by the Prada and Capri Holdings board of directors.
Read more: How is Prada thriving when its rivals are not? And will it acquire Versace?
Prada chief executive Andrea Guerra said the deal was aimed at building a "sustainable revenue growth” and boosting the brand's identity, and was not about squeezing synergies.
Prada's statement underlined that Versace will "maintain its creative DNA and cultural authenticity”, while benefitting from its "industrial capabilities, retail execution and operations expertise”.
There are no plans to change the CEO and Miuccia Prada will not be involved in the creative side of Versace, the executives said.
Guerra added that the recent creative shakeup at Versace, with Miu Miu head of design Dario Vitale replacing Donatella Versace as creative director effective April 1, had nothing to do with the deal.
He called it "an independent, very personal” decision by Vitale.
Lorenzo said the experience of Miu Miu's growth had shown that small changes can make all the difference.
”We don't need to change the brand, revolutionise it. We need to just evolve it, make the right things happen, and all together they are hopefully going to bring a huge spark and bring back Versace to be a huge success,'' he said.
Capri Holdings, which owns Michael Kors and Jimmy Choo, paid US$2bil (RM8.9bil) for Versace in 2018, but had been struggling to position Versace’s bold profile in the recent era of "quiet luxury″.
Versace represented 20% of Capri Holdings 2024 revenue of €5.2bil (RM26.1bil). An analyst presentation for the Prada deal said that Versace would represent 13% of the Prada Group's pro-forma revenues, with Miu Miu coming in at 22% and Prada at 64%.
The Prada Group, which also includes Church’s footwear, reported a 17% boost in revenues to €5.4bil (RM27.1bil) last year.
Donatella, who took over as creative director at the fashion house founded by her brother, Gianni Versace, after his 1997 murder, continues with the fashion house in the new role of chief brand ambassador.
Read more: Stakes are high for luxury fashion, as brands reshuffle their head designers
"I am absolutely delighted to become part of the Prada family,'' she wrote in a post on Instagram beneath a photograph of herself and Miuccia Prada.
”I am honoured to have the brand in the hands of such a trusted Italian family business, and I am ready to support this new era for the brand in any way I can.”
The Italian government welcomed a deal that appears to secure Versace's longer term future as other family-owned fashion brands have faltered or even disappeared after opening up to outside investors.
"An historic ‘Made in Italy’ brand is Italian again,'' Industry Minister Adolfo Urso said. – AP
