Italian fashion house Prada announced Thursday that it had reached a deal with US group Capri Holdings to buy Versace for 1.25 billion euros ($1.39 billion).
The acquisition will create a luxury group with revenues of over six billion euros that could better compete with industry giants such as the French conglomerates LVMH and Kering amid a slowdown in the sector worldwide.
鈥榃e 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,鈥� Prada group chairman and executive director Patrizio Bertelli said in a statement.
In 2018, Capri paid 鈧�1.83 billion (then $2.1 billion) to acquire Versace, which was previously owned 80 per cent by the Versace family and 20 percent by the US investment fund BlackRock.
Amid declining sales, it put the Milan-based label up for sale, and began exclusive negotiations with Prada at the end of February.
Capri, which also owns Jimmy Choo and Michael Kors, had to accept a reduced price from Prada amid the market turmoil caused by US President Donald Trump's tariffs.
The Financial Times had reported that the price was initially expected to be about $1.6 billion but had been negotiated downwards in recent days.
Last month, Donatella Versace stepped down as creative director after more than 30 years, in what was widely seen as a prelude to the accord.
She took over in 1997 following the murder of her older brother Gianni, who founded the Milan-based label in 1978.
But on April 1 she was replaced as creative director by Dario Vitale, who has overseen soaring sales at Miu Miu, Prada's sister brand targeting a younger clientele.
Donatella Versace, who turns 70 in May, is now the label's chief brand ambassador.
Five things to know about Versace
Italian fashion giant Versace, the long-held family business known for its flashy, sexy designs and Medusa head logo, will now become part of Prada, its larger rival and polar opposite in terms of style.
Gianni Versace, stylist of stars
Born in Calabria, southern Italy, to a dressmaker mother, Gianni Versace began designing clothes at a young age and moved to Milan, the fashion capital, when he was 25.
In 1978, he presented his first signature collection, with his brother Santo taking care of the label's business arm.
鈥楬e was a 360-degree creator, a real artist, he had a pure creative vision on colours and materials,鈥� Stefania Saviolo, director of the luxury and fashion centre at Bocconi University, told AFP.
Versace wowed the showbiz world, dressing A-listers from Madonna to Elton John and getting 1980s supermodels like Claudia Schiffer, Naomi Campbell and Cindy Crawford to strut their stuff down the catwalk for him.
鈥楾HAT鈥� dress
Gianni Versace's collections were colourful, sexy and over the top. His designs mixed baroque prints, animal skin motifs, bondage-style leather, slits and, especially, ultra-tight fits.
At the 1994 premiere of 鈥楩our Weddings and a Funeral鈥�, he dressed actress Liz Hurley in a famously suggestive black dress.
Made from silk and lycra, with a sharply plunging neckline and a long slit up the side, the dress was held together by several oversize golden safety pins.
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The dress catapulted Hurley, then romantically involved with actor Hugh Grant, to fame and became simply known as 鈥楾HAT dress鈥�.
Death and fall
On July 15, 1997, Gianni Versace was shot dead by luxury-obsessed serial killer Andrew Cunanan as he returned to his luxury villa in Miami after buying his morning papers.
The killing shocked the worlds of fashion and show business at a time when the brand was at its height.
Gianni's younger sister Donatella, then in charge of the lower-cost Versus line, took over as artistic director, while Santo kept control of the business side of the enterprise.
But the Versace brand's power shrank as management teams succeeded one after the other, employees were laid off and boutiques closed.
Donatella
Gianni's muse and confidante Donatella Versace had worked for 14 years at the side of her older brother and sunk into depression after his death, going into rehab for drug addiction in 2004.
Eternally tanned with dyed blonde hair and a penchant for plastic surgery, she was initially dismissed as a lightweight substitute for her brother.
But with time, the younger Versace rose to the challenge, producing her own showstopping creations, such as the barely-there green chiffon jungle dress worn by Jennifer Lopez at the 2000 Grammy Awards.
After nearly 30 years as artistic director, the 69-year-old stepped down last month, handing the reins to Dario Vitale, the former design director at Prada's Miu Miu brand.
Donatella Versace remains Versace's brand ambassador.
New spark
Since the US holding company Capri Holdings acquired Versace for about 1.8 billion euros in 2018, it has lost some of its lustre.
鈥楾he Versace brand has become too commercial. Prada can allow it to return to its golden age and reconnect with its luxury DNA,鈥� fashion consultant Antonio Bandini Conti told AFP.
Prada's deeper pockets will help the brand compete in an increasingly crowded field of well-funded luxury brands dominated by France's LVMH fashion conglomerate.
Most recently, Versace posted $193 million in revenue for its fiscal 2025 third quarter, down 15 per cent from the period a year earlier.
