Italian luxury brand Prada is reportedly in negotiations to acquire Versace from Capri Holdings. According to Bloomberg, the deal could be worth up to €1.5 billion (approximately $1.6 billion), with a potential agreement expected within this month. However, the acquisition is not yet finalized, and changes in terms or even a breakdown in negotiations remain possible.
Versace’s Current Status and Background of the Sale
Capri Holdings acquired Versace for $2.1 billion in 2018, but the brand’s recent performance has been sluggish. In the October-December quarter of 2024, Versace reported revenue of $193 million, marking a 15% decline compared to the same period in the previous year. The company is expected to post a net loss for the current fiscal year and aims to break even next year. Capri has projected that Versace’s revenue will grow to $900 million by 2028, with a long-term goal of reaching $1.5 billion. However, market conditions may pose challenges in achieving these targets.
Financial instability is another concern. In February 2024, S&P Global Ratings downgraded Capri’s credit rating, citing weak financial performance and high debt levels as risk factors. Furthermore, the U.S. Federal Trade Commission (FTC) blocked an $8.5 billion acquisition deal by Tapestry, forcing Capri to reconsider its strategic direction.
Additionally, Versace lacks signature products that can provide stable revenue, making it more vulnerable to market fluctuations.
Prada’s Growth Strategy and Market Response
Meanwhile, Prada has been strengthening its brand portfolio to compete with major luxury conglomerates such as LVMH Moët Hennessy Louis Vuitton and Kering. The company has seen strong performance from Miu Miu, which has driven its recent growth. If the Versace acquisition materializes, Prada’s scale and influence will expand, further enhancing its competitiveness in the global luxury market.
Following reports of Prada’s potential acquisition of Versace, Prada’s stock price surged by 3.5% on the Hong Kong Stock Exchange. As of now, neither Prada nor Capri Holdings has issued an official statement regarding the negotiations.
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