Prada to buy Versace in €1.25bn deal

(Sharecast News) - Italian luxury fashion brand Prada has agreed to buy rival Versace from Capri Holdings in a €1.25bn deal. Prada said that "Versace will maintain its creative DNA and cultural authenticity, while benefitting from the full strength of the group's consolidated platform, including industrial capabilities, retail execution and operational expertise".

The deal is expected to close over the course of the second half of this year.

Chairman and executive director Patrizio Bertelli said: "We are delighted to welcome Versace to the Prada Group and to build a new chapter for a brand with which we share a strong commitment to creativity, craftmanship and heritage.

"We aim to continue Versace's legacy celebrating and re-interpreting its bold and timeless aesthetic; at the same time, we will provide it with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships. Our organisation is ready and well positioned to write a new page in Versace's history, drawing on the group's values while continuing to execute with confidence and rigorous focus."

Chief executive Andrea Guerra said: "The acquisition of Versace marks another step in the evolutionary journey of our group, adding a new dimension, different and complementary. The group's infrastructure is strong, we have verticalised our brands' organisations and reinforced our routines and processes. We feel ready to open this new chapter. Versace has huge potential. The journey will be long and will require disciplined execution and patience.

"The evolution of a brand always needs time and constant focus. I would like to thank Capri Holdings for having preserved and enhanced the heritage of this wonderful brand. Notwithstanding the sector uncertainties, we look at the future with confidence, focused on a long-term strategic vision."

Stifel said: "Versace has distinctive brand aesthetics that are potentially complementary to Prada, enjoys strong brand awareness and should be able to leverage Prada's industrial, retail and operating expertise to turn the business around.

"We have mixed expectations about this deal at first glance. On the positive side, Prada is buying Versace at depressed levels at a reasonable multiple. Versace has a new creative director, Dario Vitale, who could reignite Versace brand momentum. On the negative side, Versace is a turnaround story that adds risk and complexity to Prada's compelling organic growth story and dilutes the group's margin/ROIC."