Prada poised to seal Versace deal after Trump’s tariffs spur $200mn discount
Italian fashion group set to announce cut price $1.38bn tie-up with Capri-owned house as soon as Thursday
Italian fashion group Prada is closing in on the purchase of Versace after negotiating a discount of more than $200mn, due to the impact of US President Donald Trump’s trade war.
Prada and Capri Holdings, Versace’s owner, are set to announce a deal worth about $1.38bn as soon as Thursday, according to people with direct knowledge of the talks. These people added that the transaction price, which had been expected to be agreed at about $1.6bn, was renegotiated downwards in recent days following the market turmoil and pressures that US tariffs were expected to place on Versace’s business.
The people cautioned that the timing of the deal’s announcement could slip and small price adjustments could still be made. Capri chief executive John Idol is in Milan to finalise the details with the Prada family, according to one of the people. Prada and Capri both declined to comment.
Capri’s share price has fallen by more than a third since Trump announced sweeping tariffs on global trading partners last week, crashing markets and reducing the group’s total market value to $1.5bn.
Capri, which also owns Jimmy Choo and Michael Kors, and the Prada Group have been locked in exclusive negotiations for more than a month. Capri’s initial asking price of €3bn and the future of Versace’s creative director, Donatella Versace, were two of the main sticking points in the negotiations, according to people close to the talks.
Last month, Donatella Versace stepped down after 30 years at the creative helm of her namesake label and was replaced by Dario Vitale, the design director of Miu Miu, one of the Prada Group’s brands.
The move was seen as a sign that the two groups were edging closer to an agreement. However, recent market turmoil and Capri’s share-price plunge threatened to derail the deal, said two people close to the talks.
A cut-price deal will mean Capri takes an even steeper haircut on Versace, which it bought in 2018 from the Versace family at an enterprise value of €1.83bn.
Versace’s brand equity has suffered from Capri’s decision to license many of its products to third parties, including Luxottica and Euroitalia. Versace’s sales fell by almost 11 per cent in its most recent quarter and the brand currently operates at a loss.
Prada’s high brow aesthetic and Versace’s more maximalist brand are seen as potentially complementary, but some industry insiders see Versace’s relaunch as a complex task.
Vitale, who enjoyed success at Miu Miu alongside founder Miuccia Prada, will be tasked with reviving the label by making it more appealing to a new generation of luxury consumers.
New York-based Capri has been looking to sell Versace for some time. The plan accelerated last year when a US court blocked a proposed $8.5bn merger with rival Tapestry, which owns Coach and other affordable luxury brands, over competition concerns. It has also been entertaining interest from potential buyers of luxury shoe brand Jimmy Choo, according to people familiar with the situation, which it bought for $1.35bn in 2017.
Capri has faced challenges to both its revenues and profitability as brands across its portfolio struggle amid a global luxury slowdown, which has hit the aspirational segment its brands target particularly hard. Michael Kors — which accounts for about 70 per cent of group revenues — has been performing poorly. A deal would allow Capri to refocus on turning the brand around while cutting its debt.
