Prada, closer to buying Versace for €1.5 billion

BarcelonaLuxury label Prada is finalising a deal to buy the Versace brand from fashion group Capri Holdings Ltd. for a price of more than 1.5 billion euros, as published Bloomberg This Monday. Both companies could reach an agreement for the acquisition of the brand created by the late designer Gianni Versace this month, according to sources close to the negotiations cited by the publication.

Capri, which also owns other luxury brands such as Jimmy Choo and Michael Kors, bought Versace in 2018 for around 1.8 billion euros. There had been rumours in the sector for months about the acquisition of Versace by Prada, which would want to consolidate an Italian haute couture giant to compete with global luxury groups such as the French LVMH – which manages Louis Vuitton, Christian Dior and Givenchy – and Kering – which controls Gucci, Yves Saint Laurent.

Bloomberg also points out that Prada has emerged fairly well from the latest crises in the luxury sector, and that its sales soared in the third quarter, mainly due to the popularity of the Miu Miu brand among younger consumers. The group is controlled by Miuccia Prada – the daughter of the founder of the firm, Mario Prada – and her husband, Patrizio Bertelli. The family still holds around 80% of the company's shares.

The Italian fashion house, which is listed on the Hong Kong stock exchange, has a market capitalisation of around 21.8 billion dollars, having risen by around 10% so far this year. Even so, it is far from the volume of other giants in the sector such as LVMH, which has a market value of 347.5 billion euros.

Financial results

During the first nine months of last year, Prada achieved revenues of 3.829 billion euros, 15% more than in the previous year. Its annual accounts will be published this week. In contrast, Versace had revenues of 613 million dollars during the same period, a fall of almost 20% on the last year. In addition, its operating loss was 41 million dollars, compared with the 24 million profit of the previous year. As a whole, the Capri group accumulated a negative operating result of 636 million in the first nine months of the year.

After the Italian designer Gianni Versace was murdered outside his Miami home by Andrew Cunanan in 1997, the creative direction of the firm passed to his younger sister, Donatella Versace. She also inherited 20% of the shares; while her daughter, Allegra, received 50% and and its other brother, Santo Versace, another 30%. In 2014, the company sold 20% of its capital to the investment fund Blackstone and four years later it passed into the hands of Capri Holdings.