Dive Brief:
- Prada Group has entered a definitive agreement to buy Versace from Capri Holdings for about $1.4 billion in cash, according to news releases from both companies Thursday. The deal is expected to close in the second half of the year.
- Under the Prada umbrella, Versace will maintain its creative and cultural identity, Prada Group said in its release. The company added that Versace has “significant untapped growth potential.”
- The deal comes after Donatella Versace stepped down from her position as chief creative officer at Versace earlier this month. The role was filled by Dario Vitale, an alum of Prada Group-owned Miu Miu.
Dive Insight:
The announcement comes after months of rumors that Prada Group was weighing the idea of buying Capri-owned Versace. The announcement of Vitale as creative director accelerated those rumors.
Patrizio Bertelli, Prada Group’s chairman and executive director, said in the release that the company was ready to build a new chapter for Versace, with a commitment to the brand’s craftsmanship and heritage.
“We aim to continue Versace’s legacy celebrating and re-interpreting its bold and timeless aesthetic; at the same time, we will provide it with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships,” Bertelli said. “Our organisation is ready and well positioned to write a new page in Versace’s history, drawing on the Group’s values while continuing to execute with confidence and rigorous focus.”
Versace has been struggling financially over the past several quarters. In Capri’s most recent quarterly earnings report, Versace revenue fell 15% to $193 million.
Capri is selling Versace for markedly less than the $2.12 billion it paid for the brand in 2018.
The journey of adding Versace to the Prada Group portfolio will be long and “require disciplined execution and patience,” Andrea Guerra, Prada Group CEO, said in the release, adding that the evolution of a brand “always needs time and constant focus.”
Selling Versace frees up Capri’s ability to focus on improving the sales at its Michael Kors and Jimmy Choo brands. Since the end of a merger deal with rival luxury handbag company Tapestry last year, Capri has continued to struggle.
Capri implemented multiple changes since the acquisition fell through, including reorganizing the leadership structure at Michael Kors, its largest brand.
John Idol, Capri CEO and chairman, said in Capri’s release that the deal with Prada Group reflects Capri’s commitment to further growth at its remaining two brands.
“Over the last six years, we have made tremendous progress in repositioning the brand to place greater emphasis on its luxury heritage and exceptional craftsmanship,” Idol said. “Through elevated product, marketing and store enhancements, the brand is now well positioned for sustainable long-term growth. We are confident that Prada Group is the perfect company to further guide Versace into its next era of growth and success.”
Meanwhile, Prada has challenged a luxury sector slowdown seen at rival luxury conglomerates such as LVMH. In the Prada Group’s latest fiscal year, its revenue jumped 15% year over year to 5.43 billion euros, or about $6.1 billion. Prada is expected to report its Q1 earnings this month.
