Prada has agreed to acquire Versace from Capri Holdings in a deal valued at $1.375 billion, including debt.

In a landmark move set to reshape the landscape of Italian fashion, Prada has agreed to acquire Versace from Capri Holdings in a deal valued at $1.375 billion, including debt. The acquisition brings together two of Italy’s most iconic luxury houses, reinforcing the country’s position in a market long dominated by French conglomerates such as LVMH.

The deal comes at a pivotal time for Versace. Just weeks after Donatella Versace announced her departure as chief creative officer on March 13, the brand is now poised for a new chapter under Prada’s stewardship. Donatella, who took the reins following the 1997 murder of her brother Gianni, welcomed the acquisition with warmth.

“Gianni and I have always had a huge admiration for Miuccia, Patrizio and their family,” she said. “I am honoured to have the brand in the hands of such a trusted Italian family business and I am ready to support this new era for the brand in any way that I can.”

Patrizio Bertelli, chairman of Prada and husband of Miuccia Prada, emphasized the company’s commitment to preserving Versace’s bold identity while ensuring its long-term growth. “We aim to continue Versace’s legacy, celebrating and re-interpreting its bold and timeless aesthetic,” Bertelli said. “At the same time, we will provide it with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships.”

The acquisition price is notably lower than the $2.15 billion Capri Holdings paid for Versace in 2018, amid market expectations that had recently hovered around $1.7 billion. Capri Holdings CEO John Idol framed the sale as a strategic move to streamline the company’s focus.

“This transaction reflects our commitment to increase shareholder value, strengthen our balance sheet and power the future growth of Michael Kors and Jimmy Choo,” said Idol.

Wall Street was less enthusiastic. Capri Holdings shares fell 3% following the announcement and are down 24% for the year.

The deal also reflects diverging fortunes between the two brands. While Versace has struggled with losses in recent quarters, Prada has proven resilient amid a broader slowdown in luxury spending. Prada CEO Andrea Guerra said the acquisition represents a long-term commitment. “Versace has huge potential. The journey will be long and will require disciplined execution and patience,” he noted.

To finance the purchase, Prada has taken on €1.5 billion in new debt—marking its most significant acquisition since its controversial late 1990s purchases of Helmut Lang and Jil Sander, which Bertelli later referred to as “strategic mistakes.”

Founded in Milan in 1913 as a leather goods store, Prada has grown into a global powerhouse under Miuccia Prada and Bertelli, with a portfolio that includes Miu Miu and Church’s. Versace, founded in 1978 and instantly recognizable by its Medusa logo, brought a flamboyant, baroque aesthetic to the forefront of fashion—one that stands in stark contrast to Prada’s signature minimalist style.

The fusion of these two brands marks a defining moment in luxury fashion—and perhaps a renaissance for Italian influence on the global stage.