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In a landmark deal, the Prada Group has announced the acquisition of Versace for €1.25 billion ($1.4 billion), marking a significant shift in the global luxury fashion industry.

This merger brings together two iconic Italian brands, with Prada aiming to strengthen Italy's presence in an industry traditionally dominated by French conglomerates like LVMH and Kering.

The deal follows a period of significant change at Versace, including the recent departure of Donatella Versace as the brand's creative director.

However, Donatella will remain with the company in a new role as Chief Brand Ambassador, Reuters said.

The merger also signals a fresh direction for Versace, as it will now benefit from Prada's robust operational expertise, while maintaining its distinct creative identity.

Prada's Chairman, Patrizio Bertelli, emphasized the company's commitment to honoring Versace's legacy, stating, "We aim to continue Versace's legacy celebrating and re-interpreting its bold and timeless aesthetic."

Bertelli also highlighted that the acquisition would provide Versace with a solid foundation for future growth, leveraging the Prada Group's long-standing relationships and investments in the luxury sector.

While Versace has struggled to perform profitably in recent years, Prada sees significant untapped potential in the brand. "Versace has huge potential. The journey will be long and will require disciplined execution and patience," said Prada CEO Andrea Guerra.

Prada's acquisition of the brand is seen as a strategic move to strengthen its position in the luxury market, with plans to enhance Versace's appeal without altering its core creative essence.

Prada Confident in Versace's Future as Acquisition Nears Completion

The acquisition comes at a time when the luxury fashion market is facing challenges, including global economic uncertainty and shifting consumer preferences towards more understated, "quiet luxury."

Nonetheless, Prada remains confident that with the right approach, it can revitalize Versace and restore its position as one of Italy's most prestigious fashion houses.

Lorenzo Bertelli, Prada's Chief Marketing Officer, stressed that the brands have no creative overlap, noting that the merger allows for complementary growth.

"We are buying a brand with a very recognizable aesthetic," he said, underlining that Versace's brand recognition places it among the top ten luxury names in the world.

Prada has made it clear that the merger will not result in significant leadership changes.

According to AP, Miuccia Prada, who remains deeply involved in the creative direction of the Prada brand, will not have a hand in shaping Versace's creative future.

Instead, Dario Vitale, former head of design at Miu Miu, will take over as Versace's creative director starting April 1, 2025.

The merger is expected to close in the second half of the year, pending regulatory approval, and will be funded through €1.5 billion in new debt.

As the deal is finalized, Prada plans to leverage Versace's bold, glamorous aesthetic alongside its own minimalist style, creating a diverse and powerful portfolio that will compete directly with the industry's largest players.

Italian Industry Minister Adolfo Urso remarked, "An historic 'Made in Italy' brand is Italian again," celebrating the return of a beloved national treasure to its roots.