Prada Is Reportedly Close to Buying Versace for $1.6 Billion

Prada’s latest play? Adding Versace to its luxury empire. 

Prada SpA is reportedly close to acquiring the iconic Italian fashion house from Capri Holdings Ltd., with a deal valued at approximately €1.5 billion ($1.6 billion), Bloomberg reported on Sunday. The transaction could be finalized as early as this month. But, as with any deal, the timing and valuation could still change, and there’s always the chance the talks could fall through. 

Capri, which bought Versace for €1.8 billion in 2018, has been exploring different options for the brand as part of its broader strategy. If the mega-deal goes through, it will give Prada a bigger presence in the global luxury market, putting it in a stronger position to compete with luxury heavyweights like LVMH and Kering, which currently dominate the industry with an array of prestigious labels. It would also be a significant moment for Italian fashion, reversing the trend of major Italian houses like Gucci and Valentino being acquired by foreign companies—and two Italian icons are better than one.

“Prada would be well positioned to realize Versace’s brand potential in the long term, potentially paving way for the group to become Italy’s answer to the French luxury conglomerates,” UBS Group AG’s Susy Tibaldi said.

With the backing of Miu Miu, the little sister to Prada, the company has emerged as a major player in the sector, achieving significant sales growth last year even amidst economic challenges. That said, Prada’s market value is still much smaller compared to its biggest rivals.  

The fashion house’s current market capitalization stands at approximately HK$175 billion (about $22.5 billion). Prada is mainly controlled by Miuccia Prada and her husband, Patrizio Bertelli, who hold roughly 80 percent of the company. Versace itself has had a rough year, with a 15 percent drop in sales and a widening operating loss of $21 million.  

For comparison, LVMH—owner of Louis Vuitton, Christian Dior, and a host of other luxury brands including Fendi and Loro Piana—is valued at around €347.5 billion ($362 billion). As part of its most recent moves, LVMH acquired a stake in the company that owns Moncler SpA last year. Still, a potential acquisition of Versace would give Prada a strong boost and help the brand on its quest to even the playing field with the other luxury conglomerates.

Credit: robbreport.com