Prada acquires Versace for $1.38 billion despite tariff war uncertainties

Italian luxury fashion house Prada Group has reached a deal to acquire designer label Versace from Capri Holdings in a transaction valued at approximately $1.38 billion, the company announced on Thursday. The acquisition, backed by the boards of both companies, is expected to close in the second half of the year pending regulatory approval.

The agreement follows months of stalled negotiations as market volatility, driven in part by former U.S. President Donald Trump’s tariff policies, complicated the transaction. Trump’s reciprocal tariffs on international trade partners created sourcing challenges and heightened fears of a global recession, according to The Wall Street Journal. These tensions prompted Prada to renegotiate the acquisition price from an initial $1.6 billion to below $1.4 billion, insiders told The Financial Times.

To finance the purchase, Prada said it will take on roughly $1.6 billion in new debt, including over $1 billion already borrowed. The move signals Prada’s strategic push to expand its footprint in the high-end fashion market through the acquisition of one of Italy’s most iconic fashion brands.

Founded in 1978 by Gianni Versace, the brand became synonymous with bold, glamorous design. Following Gianni’s death in 1997, his sister Donatella Versace took over as chief creative officer. Under her leadership, the label remained a household name in luxury fashion. Versace was last sold in 2018 to Capri Holdings—then known as Michael Kors—in a $2.1 billion deal.

Speculation about a possible sale resurfaced after Donatella, now 69, announced her decision to step down last month, a move that reportedly softened Capri’s asking price. According to The Financial Times, Capri initially sought over $3 billion for Versace before Donatella’s departure affected the brand’s valuation.

The acquisition marks a strategic win for Prada and a necessary exit for Capri Holdings, which has struggled with declining revenues. Capri is forecasting an $810 million revenue drop this fiscal year, down from $1 billion in 2024. The firm previously attempted to sell itself to Tapestry, the parent company of Coach, in an $8.5 billion deal that was blocked by the U.S. Federal Trade Commission in 2024 over antitrust concerns.

Prada’s acquisition of Versace represents a major consolidation in the luxury fashion sector, potentially reshaping the competitive landscape as Italian brands strengthen their positions amid global market uncertainty.