Prada officially buys rival Italian luxury brand Versace in $1.4B cash deal

Core Viewpoint - The Prada Group has successfully acquired Versace for $1.375 billion, aiming to revitalize the brand's performance after its lackluster results post-pandemic while integrating it with Prada's and Miu Miu's distinct aesthetics [1][2]. Acquisition Details - The acquisition was finalized after receiving all necessary regulatory approvals, with Capri Holdings planning to use the proceeds to reduce its debt [2]. - Versace was previously owned by Capri Holdings, which had purchased it for $2 billion in 2018 but struggled to align the brand with current luxury trends [7]. Leadership and Future Strategy - Lorenzo Bertelli, heir to the Prada Group, will lead Versace as executive chairman, indicating no immediate executive changes despite acknowledging the brand's historical underperformance [4]. - Donatella Versace expressed her enthusiasm for the acquisition, linking it to the legacy of her late brother, Gianni Versace [3]. Financial Impact - Versace accounted for 20% of Capri Holdings' projected revenue of €5.2 billion for 2024, while it is expected to represent 13% of the Prada Group's pro-forma revenues, with Miu Miu at 22% and Prada at 64% [9]. - The Prada Group reported a 17% increase in revenues to €5.4 billion last year, indicating a strong financial position to support the acquisition [9]. Creative and Operational Integration - Versace is undergoing a creative relaunch under new designer Dario Vitale, who previously led design at Miu Miu, although this transition was not directly related to the acquisition [6]. - The Prada Group is preparing to integrate Versace into its manufacturing system, emphasizing the shared expertise in production across its brands [11][12]. Investment in Growth - The Prada Group has invested €60 million in its supply chain this year, which includes new factories and increased production capabilities, building on a total investment of €200 million from 2019 to 2024 [14].