Prada Acquires Versace for 2 Trillion Won...Challenges LVMH and Kering
On December 2 (local time), Italian luxury brand Prada announced that it had acquired rival Versace for $1.375 billion (approximately 2.0182 trillion won).
According to the Associated Press, Prada issued a statement on this day, confirming that it had completed the acquisition of Versace after receiving all necessary regulatory approvals.
Prada acquired 100% of Versace's shares from its parent company, Capri Holdings of the United States, through a cash transaction. Capri Holdings, which owns fashion brands Michael Kors and Jimmy Choo, plans to use the proceeds from the Versace sale to repay debt.
Versace is a world-renowned fashion brand founded in Milan, Italy, in 1978 by Gianni Versace. The brand's symbol is Medusa, a monster from Greek and Roman mythology, and it is known for its bold and glamorous designs. After the founder's death in 1997, the company suffered from management difficulties and was sold to Capri Holdings in 2018, but continued to struggle with poor performance.
With Prada, known for its minimalist approach, acquiring the flamboyant Versace, the company is expected to broaden its customer base. Prada is also seen as challenging French luxury groups such as Louis Vuitton Moet Hennessy (LVMH) and Kering. Reuters described this acquisition as a dramatic strategic shift for Prada.
Lorenzo Bertelli, son of Prada founder Miuccia Prada and heir to the Prada Group, is expected to become the executive chairman leading Versace's next phase of growth. While Bertelli stated that there would be no abrupt changes in Versace's management, he pointed to the brand's prolonged underperformance and signaled a sweeping transformation.
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Luca Solca, Director at Bernstein, highlighted the appeal of the deal, noting that "the combination of Prada's minimalism and Versace's maximalism" means the two brands do not compete for the same customers. He added, "Versace is well past its prime," and stated, "The challenge and opportunity lie in making the brand attractive and exciting again."
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