In a major move within the luxury fashion industry, Prada has acquired Versace from Capri Holdings for €1.25 billion ($1.4 billion). This acquisition, set to close by the end of 2025, will combine two of Italy’s most iconic fashion brands, creating a powerhouse in the global luxury market.

The deal, funded through €1.5 billion in new debt, unites Prada’s minimalist design ethos with Versace’s bold and glamorous aesthetic. This merger positions the combined entity to better compete with global luxury conglomerates like LVMH, cementing Italy’s stronghold in the fashion world.

Prada CEO Andrea Guerra highlighted the need for long-term investment to revitalize Versace, which has faced financial struggles in recent years. Notably, Donatella Versace stepped down as creative director last month and transitioned to the role of Chief Brand Ambassador.

Despite the excitement, analysts caution that restructuring Versace’s image may come with challenges in the short term, particularly in aligning its daring designs with current market trends.

Capri Holdings, which acquired Versace for $2.1 billion in 2018, plans to use the sale proceeds to reduce debt and continue investing in its remaining brands, Michael Kors and Jimmy Choo.

This bold acquisition signals a new era for Prada and Versace, strengthening Italy’s position in the competitive luxury fashion sector.