Prada to buy rival Versace in $2.3 billion deal

The Prada Group has announced a deal to buy Italy’s Versace from the US luxury group Capri Holdings.

The agreement values the Versace fashion house at 1.25 billion euros ($A2.3 billion).

Prada said the addition of Versace’s “highly recognisable aesthetic … constitutes a strongly complementary addition” to its portfolio, which includes the Prada and Miu Miu fashion brands.

It said Milan-based Versace offered “significant untapped growth potential”.

The final value of the deal will be adjusted at closing, expected in the second half of the year.

It will be funded by 1.5 billion euros in new debt and has been approved by the Prada and Capri Holdings board of directors.

“Versace will maintain its creative DNA and cultural authenticity while benefitting from the full strength of the Group’s considerable consolidated platform, including industrial capabilities, retail execution and operational expertise,” Prada said in a statement.

Versace, founded in 1978 by the late Gianni Versace, has been owned since 2018 by Capri Holdings which includes Michael Kors and Jimmy Choo.

Capri Holdings paid $US2 billion ($A3.2 billion) for Versace but had been struggling in the recent era of “quiet luxury’” to position the stalwart of Italian fashion with its sexy silhouettes and loud patterns.

Last month, Capri Holdings named Dario Vitale as creative director to replace Donatella Versace, who assumed the role after her brother’s 1997 murder.

Vitale came from Miu Miu, the stunningly successful youth-driven brand in the Prada Group.

Versace was given the new role of chief brand ambassador in the shake-up, which was widely viewed as setting the scene for the long-rumoured Prada sale.

Miuccia Prada acknowledged the group’s interest on the sidelines of Milan Fashion Week in February.