Prada's $1.38bn Acquisition of Versace
- katerinageorgiou5
- Jun 2
- 5 min read
By Edward Fung, Freya Zhang, Kelvin Chan (HKUST); Terry Zhang, George Luo, Leo Wu (UBC)
Photo: Bloomberg
Overview of the deal
Acquirer: Prada
Target: Versace
Total Transaction Size: $1.38bn (EV)
Closed Date: H2 2025
Target Advisors: Barclays (Financial); Wachtell, Lipton, Rosen & Katz (Legal)
Acquirer Advisors: Citi, Goldman Sachs (Financial); Skadden, Arps, Slate, Meagher & Flom LLP (Legal)
Announced April 10, 2025 – Prada Group (SEHK: 1913) will acquire 100% of Italian fashion house Versace from Capri Holdings (NYSE: CPRI) for an enterprise value of $1.4 billion in cash, subject to adjustments. The deal, approved by both boards, is expected to close in late 2025 pending regulatory approvals.
Prada will fund the acquisition with approximately $1.6 billion in new debt. The final price reflects significant negotiation: originally targeted near $1.6 billion, Versace's value dropped amid U.S. tariff policies under President Trump, which triggered a selloff that reduced Capri's market cap to $1.5 billion and pressured the final valuation downward.
For Capri (formerly Michael Kors), the sale concludes a challenging period. It acquired Versace for $2.1 billion in 2018 but recently forecast an $810 million revenue drop. Earlier attempts to sell Versace for over $3 billion stalled after creative director Donatella Versace announced her departure.
The transaction consolidates two Milanese heritage brands under Prada, which cited Versace’s "strongly complementary" aesthetic and growth potential. Capri will use proceeds to strengthen its balance sheet and accelerate investment in the remaining brands, Michael Kors and Jimmy Choo. This marks Prada’s largest acquisition since its IPO and creates Italy’s first homegrown luxury conglomerate.
"The acquisition of Versace marks another step in the evolutionary journey of our Group, adding a new dimension, different and complementary.” - Andrea Guerra, Group CEO of Prada
Company Details (Acquirer - Prada)
Prada is a leading luxury fashion house that designs, manufactures, and sells high-end clothing, accessories, and footwear. The company operates several prestigious brands, including Prada, Miu Miu, Church’s, Car Shoe, and Marchesi 1824. Prada is renowned for its innovative designs and use of high-quality materials, maintaining a strong presence in the global luxury market, with a presence in over 70 countries through 609 directly operated stores as of December 31, 2024.
Founded in 1913, headquartered in Milan, Italy
CEO: Andrea Guerra
Number of employees: 15,216
Market Cap: $16.98bn (as of 30/05/2025)
Enterprise Value (EV): $18.85bn
LTM Revenue: $5.88bn
LTM EBITDA: $2.16bn
LTM EV/Revenue: 3.21x
LTM EV/EBITDA: 8.73x
Recent Transactions: Acquisition of 15% stake in Luigi Fedeli e Figlio (Jun 2023); Acquisition of 40% stake in Filati Biagioli Modesto (Jun 2021)
Company Details (Target - Versace)
Versace has long been recognized as one of the world’s leading fashion design houses and is synonymous with Italian glamour and style. Versace operates across apparel, accessories, fragrances, and home goods, with a strong emphasis on ready-to-wear and high-end couture. Prior to the acquisition, Versace was owned by Capri Holdings, which acquired it in 2018 for $2.1 billion. Versace operated 228 retail stores in major fashion cities and shopping destinations worldwide, averaging about 2,900 square feet each. The brand also runs e-commerce sites in the U.S., Europe, and China, covering 90 countries.
Founded in 1978, headquartered in Milan, Italy
CEO: Emmanuel Gintzburger
Number of employees: 1,604
EV: $1.38bn
LTM Revenue: $880m (As of 31/12/2024)
LTM EBITDA: $10m
LTM EV/Revenue: 1.42x
LTM EV/EBITDA: 137.50x
Projections and Assumptions
Short-Term Consequences
The transaction, valued at approximately $1.4 billion, is financed largely through new debt ($1.6 billion in term loans and bridge facilities). Prada’s strong financial position, with $5.9 billion in revenue and robust earnings growth in 2024, suggests the acquisition may initially be dilutive to EPS due to integration costs and debt servicing. However, Prada’s management views the deal as a strategic investment to revive Versace’s underperforming sales and generate long-term accretive value.
Moreover, Versace’s bold, Medusa-inspired designs contrast with Prada’s more refined elegance, creating a complementary portfolio. Prada plans to rejuvenate Versace’s product lines by appointing Dario Vitale as creative director, aiming to balance heritage with modern minimalism while preserving Donatella Versace’s iconic brand presence as chief brand ambassador.
Regarding geographic operations, Versace’s revenue is well-diversified geographically (42% EMEA, 31% Americas, 27% APAC) with 227 retail stores globally. Hence, Prada’s acquisition can expand its footprint, especially in the Americas and Asia-Pacific, leveraging Versace’s existing retail network and customer base to enhance global market penetration.
Finally, the market reaction has been positive, highlighting the strategic boldness behind the deal amid a turbulent luxury sector. Observers have praised Prada for seizing a rare opportunity to acquire Versace at a significant discount, about 34% below the $2.1 billion Capri Holdings paid in 2018, demonstrating savvy timing during a period of global economic uncertainty and tariff concerns. This move is seen as Prada “buying the dip,” capitalizing on market volatility to secure a valuable asset with strong brand equity despite Versace’s recent financial struggles.
Long-Term Upsides
Prada is making its most significant purchase in 112 years, signalling a bold return to the buying table after a decades-long pause. The move represents not only a significant expansion of its fashion portfolio but also a calculated step to cement Prada’s position as Italy’s foremost luxury group in a global market dominated by French giants such as LVMH and Kering. Versace, long known for its provocative designs and celebrity-driven identity, brings a highly recognizable, yet recently underperforming, brand to Prada’s more refined lineup, which includes Miu Miu, Church’s, and Marchesi.
This contrast is precisely what makes the acquisition strategic: Versace offers creative and demographic diversification that Prada does not currently serve. Under Capri Holdings, Versace struggled to meet its aggressive target of doubling revenue, with pricing missteps and inconsistent creative leadership eroding its aspirational appeal. Now, Prada, fresh off record 2024 results driven by Miu Miu’s 58% year-over-year growth, is well-positioned to execute a turnaround. The company plans to strengthen Versace’s accessories and leather goods offerings, upgrade its digital infrastructure, and accelerate growth in underpenetrated markets, such as the Middle East and Southeast Asia. Importantly, the deal returns Versace to Italian ownership and signals Prada’s intent to evolve from a design house into a fully scaled luxury conglomerate with global reach.
Risks and Uncertainties
Prada is betting on operational improvements and revenue acceleration, but these benefits will take time to materialize and may be offset by the significant capital investments Versace requires. On the other hand, Versace’s bold, ostentatious brand identity stands in stark contrast to Prada’s minimalist and intellectual aesthetic. Aligning these two creative cultures without diluting either could prove difficult, particularly as Donatella Versace steps back from her creative leadership role and a new vision is introduced.
Financially, the deal introduces a level of leverage Prada has historically avoided. Funded through $1.6 billion in debt, the transaction adds pressure to deliver on synergies quickly. If luxury demand weakens, as it has in key markets like China and the U.S., Prada could face squeezed margins and tighter cash flow, potentially affecting its credit profile and future investment capacity. Proposed U.S. tariffs on European luxury goods could significantly raise costs and further dampen sentiment in an already fragile global luxury market.
On the regulatory front, while luxury fashion consolidation tends to attract limited antitrust scrutiny, this cross-border transaction will require approval in multiple jurisdictions, including the EU, the U.S., and key Asian markets. Any delays could disrupt Prada’s integration timeline.
“There are no overlaps in terms of creativity, in terms of customers. We are buying a brand with huge potential, with a very recognizable aesthetic” - Lorenzo Bertelli, Chief Marketing Officer of Prada Group