Prada finalizes purchase of fashion rival Versace for $1.4 billion, launching new era

Category: (Self-Study) Business

Storyline

Hide Storyline

The Prada Group has closed the purchase of Milan fashion rival Versace in a $1.375 billion cash deal that puts the fashion house known for its sexy silhouettes under the same roof as Prada’s “ugly chic” aesthetic and Miu Miu’s youth-driven appeal. The highly anticipated deal is expected to relaunch Versace’s fortunes after middling post-pandemic performance as part of the U.S. luxury group Capri Holdings.

Prada said in a one-line statement that the acquisition had been completed after receiving all regulatory clearances. Capri Holdings, which owns Michael Kors and Jimmy Choo, said the money would be used to pay down debt.

Donatella Versace welcomed the deal in an Instagram post, which also marked the birthday of the brand’s late founder, her brother, Gianni Versace. “Today is your day, and the day Versace joins the Prada family. I am thinking of the smile you would have had on your face,’’ she wrote in a post that also featured a 1979 photo of Gianni Versace with Miuccia Prada.

Prada heir Lorenzo Bertelli is set to steer Versace’s next phase as executive chairman, in addition to his roles as group marketing director and sustainability chief. The son of co-creative director Miuccia Prada and longtime Prada Group chairman Patrizio Bertelli has said he doesn’t expect to make any swift executive changes at Versace, although he also noted that the company, which is among the top 10 most recognized brands in the world, has long been underperforming in the market.

Prada has underlined that the 47-year-old Versace brand offered “significant untapped growth potential.’’

The appeal of the deal is that it combines “the minimalist Prada (with) a maximalist Versace,” said Luca Solca, an analyst at the Bernstein Group consulting firm, meaning that the brands don’t compete for the same customers.

Versace is “long past its heyday,” Solca continued. “The challenge and the opportunity is to make it relevant again… They are going to have to invent something which is going to make the brand attractive, desirable, and interesting again.”

This article and video were provided by The Associated Press.

Script

Hide Script

[Prada employee assembling bag parts]

[Worker cutting leather parts for making bags]

[Cotton reel and worker in the background using a sewing machine]

Luca Solca (interview): “Today, after many years of atonement, after many years of focusing on organic growth, Prada becomes – in a way – acquisitive again, with one of the most iconic designer brands in Italy. And I think differently from the past, a brand that has a different DNA and a different positioning than the minimalist Prada, it’s a maximalist Versace. So it’s going to be interesting to see how they’re going to run it and make it complementary.”

[Worker sewing bag handles]

[Bags under construction, worker sewing in the background]

Luca Solca (interview): “I don’t know if Versace is necessarily a brand that is very high in terms of unprompted recognition. I think that it is long past its heyday and like in the case of Valentino, the challenge and the opportunity here is to make it relevant again. Valentino managed to do that by inventing a new, iconic style and a new iconic design which was the rock stud. I wonder if potentially Versace needs to do something similar. They have to invent something which is going to make the brand attractive, desirable and interesting again.”

[Prada Industrial Academy trainees making handbags]

Luca Solca (interview): “My understanding is that with fashion you need to continue to provide innovation and that innovation has to be a bit of a bridge between the heritage DNA that the brands have and the market opportunity where they’re trying to go. And I think this is in a way the task of Dario Vitale, the new creative director, but it’s also the task when it comes to deciding the vision of the brand and the strategic direction of the brand. It is also the task of senior management.”

[“Prada” written on the shoes of a worker]

[Workers refining handbags]

[Handbags on the production line]

This script was provided by The Associated Press.