Milan, Italy — The Prada Group finalized its acquisition of the iconic fashion label Versace in a deal valued at 1.25 billion euros (approximately $1.4 billion), the company announced on Tuesday. This acquisition merges Versace’s bold and luxurious designs with Prada’s aesthetic and Miu Miu’s youthful appeal, marking a significant shift in the competitive fashion landscape.

This purchase comes at a pivotal time for Versace, which has struggled to fully capitalize on its brand recognition after its integration into Capri Holdings. Prada’s executives expressed optimism that this strategic acquisition could reinvigorate Versace, which has been facing challenges in recovering from the pandemic’s impact on the luxury market.

Prada confirmed that the deal has received all necessary regulatory approvals, allowing the company to proceed with the integration. Lorenzo Bertelli, the heir to the Prada legacy and current marketing director, will take on the role of executive chairman at Versace. He reassured stakeholders that no immediate changes to management are planned, although he acknowledged that Versace has underperformed historically.

Versace has recently begun a creative reshuffling, welcoming new designer Dario Vitale, who debuted his collection during Milan Fashion Week. Executives clarified that Vitale’s hiring was not connected to the acquisition but was a necessary step for the brand’s rejuvenation.

The acquisition positions Versace as a key player within the Prada Group, representing an estimated 13% of its projected revenues, compared to Miu Miu’s 22% and Prada’s 64%. This contrasts with its previous role as a 20% contributor to Capri Holdings’ revenue. The Prada Group has been experiencing robust financial growth, with revenue surging by 17% to 5.4 billion euros last year.

As part of the acquisition, Prada plans to harness its in-house manufacturing capabilities to produce Versace products. Bertelli emphasized that the company’s manufacturing expertise allows for seamless integration, stating that the skill required to create products for any brand within the group is consistent across all lines.

Prada has been proactive in enhancing its production facilities, investing 60 million euros in its supply chain in 2023 alone. This investment includes a new leather goods factory near Siena and a knitwear factory in Perugia, which will bolster production capabilities across their brands.

Furthermore, Prada is focusing on training and developing a skilled workforce. Over the past 25 years, the company has trained approximately 570 artisans through its in-house academy operating in various Italian regions. Recently, 70% of the new artisans trained were hired, reflecting Prada’s commitment to sustaining craftsmanship in its supply chain.

This acquisition not only symbolizes growth for Prada and Versace but also marks an intriguing evolution in luxury fashion as the merger seeks to balance distinct brand identities while exploring new market opportunities. As Prada integrates Versace, the industry will be watching closely to see how this dynamic unfolds in the recognized realm of high fashion.