In a major shake-up for the global luxury fashion industry, Prada has officially acquired Versace in a deal valued at $1.38 billion, uniting two of Italy’s most influential style powerhouses. The acquisition price reflects a steep drop from the nearly $2 billion Capri Holdings paid when it took control of Versace in 2018.

For Prada, the addition of Versace marks a strategic expansion of its luxury portfolio—already home to Miu Miu—as it seeks to compete more aggressively with global giants like LVMH, the parent company of Louis Vuitton, Dior, and Fendi. The move comes at a pivotal time for Versace, which has experienced slowing sales and a shift in creative direction in recent years.

Versace underwent significant transformation under Capri Holdings, embracing a more understated aesthetic in place of its signature bold, baroque designs, while simultaneously pushing prices upward. The brand also saw a major leadership change earlier this year when Donatella Versace exited her role as creative director after nearly three decades. Her successor, Dario Vitale—previously a design director at Miu Miu—has begun steering the house into its next chapter.

The sale marks a roughly $700 million loss for Capri Holdings, which said the proceeds will be used primarily to reduce its debt and strengthen its financial position. “We plan to use the proceeds to repay the majority of our debt,” said Capri CEO John D. Idol.

Prada, which described the acquisition as fully approved and completed, sees significant long-term opportunity in reviving Versace’s global appeal. CEO Andrea Guerra previously noted the brand’s “enormous potential” but acknowledged that rebuilding momentum will require patience and focused execution.

With this deal, Italy’s luxury fashion arena enters a new era—one defined by consolidation, reinvention, and heightened competition on the world stage.