In a major move within the fashion industry, Prada has agreed to purchase its rival Versace in a deal valued at $1.36 billion (£1.06 billion).

The acquisition was confirmed by the Prada Group on Thursday, signaling the creation of a massive luxury fashion group that could rival the likes of LVMH and Kering.

Prada's chairman, Patrizio Bertelli, emphasized the brand's commitment to continuing Versace's legacy by celebrating its bold and timeless aesthetic. The acquisition is seen as a strategic effort to solidify Prada’s position in the global luxury market by consolidating two of Italy's most recognized designer brands. Prada Group, which already owns Miu Miu and Church's, will add Versace to its portfolio, significantly expanding its reach.

Interestingly, the price Prada agreed to pay for Versace is significantly lower than the $2.15 billion Capri Holdings spent on the brand in 2018. The deal includes Versace’s debts and comes as the luxury fashion brand has faced challenges, including operating at a loss due to a global slowdown in demand for high-end fashion.

In a notable development, Donatella Versace stepped down in March after serving as the brand’s creative director for nearly three decades. After taking over from her brother Gianni following his tragic murder, Donatella played a major role in shaping Versace’s modern identity. She will now serve as the brand's chief brand ambassador. Former Miu Miu design director Dario Vitale has taken over as Versace's new creative officer.

Prada's CEO Andrea Guerra shared his optimism about Versace’s future under the Prada Group, acknowledging that while the journey ahead would require patience and careful execution, Versace has huge potential. This acquisition is expected to position both brands for greater competition in the high-end luxury market, creating a multi-billion-dollar entity with a strong foundation for long-term growth.