To bring together two of the largest designer fashion brands, Prada has agreed to pay a billion dollars to acquire Versace, its smaller rival.
The Prada Group said on Thursday that the deal to merge the two Italian businesses is estimated to be worth $1.36 billion (£1.06 billion).
“We aim to continue Versace’s legacy celebrating and re-interpreting its bold and timeless aesthetic,” said Prada chairman Patrizio Bertelli.
A number of other designer brands, such as Miu Miu and the high-end shoe brand Church’s, are already owned by the Prada Group.
The brands will be able to compete with the likes of French luxury fashion companies LVMH and Kering after its acquisition of Versace creates a multibillion dollar luxury fashion company.
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In February, Prada and Capri started negotiating the purchase of Versace.
The $2.15 billion that Capri Holdings paid to acquire Versace in 2018 is much higher than the amount that Prada agreed to pay for the brand.
The sale, which also includes Versace’s debt load, comes as the luxury fashion firm has been losing money due to a global decline in demand.
Other designer labels that Capri owns include Michael Kors and Jimmy Choo.
Mr. Bertelli said that the Prada Group would provide Versace with “a strong platform.”
“Versace has huge potential. The journey will be long and will require disciplined execution and patience,” added Andrea Guerra, the chief executive of Prada.
After over 30 years, Donatella Versace resigned as creative director of the luxury company in March.
She had been in the role since 1997, when her brother Gianni was murdered.
Former Miu Miu design and image director Dario Vitale became chief creative officer, and the 69-year-old has a new position as chief brand ambassador for Versace.
