Prada Brings Versace Home; Check What’s Behind the $1.38 bn Fashion Biz Deal

Italian fashion brand Prada sealed a deal worth $1.38 billion to purchase financially troubled rival Versace on Thursday. The Italian luxury brand has planned to finance the acquisition with debt and is likely to borrow over one billion euros for the deal. The acquisition is expected to be completed by the second half of the year, provided it attains the required regulatory approvals. 

Prada, which recently struggled due to a slowdown in luxury demand, aims to expand its portfolio with this acquisition and strengthen its hold in the luxury fashion industry. After the deal is completed, Versace will make a comeback after 8 years to its founding country from its American owner, Capri Holdings. 

“We are confident that Prada Group is the perfect company to further guide Versace into its next era of growth and success,” said chairman and CEO, Capri Holdings, John D. Idol, in a statement on April 10.

Also Read: Big Business Wants a Slice of the Beauty Pie. But Its Not Spending Enough on Innovation

What’s Behind Versace Sale? 

Capri Holdings is eyeing a number of benefits from the sale of Versace, including strengthening its balance sheet and increasing shareholder value. The American company has planned to utilise the proceeds from the deal to lower down its debt, business investments and future share repurchases. 

“These transactions proceeds will be used to support Capri Holdings’ capital allocation priorities, including business investments, debt reduction and future share repurchases,” said Capri Holdings. 

This is the second time in nearly a decade that Versace will have a different owner. Earlier in 2018, the luxury brand was acquired by New York-based fashion company Capri Holdings from Donatella Versace and private equity giant Blackstone in a deal worth $2.1 billion. Besides Versace, the New York-based firm owns big fashion brands like Michael Kors and Jimmy Choo.