Prada is set to acquire iconic Italian fashion house Versace in a major billion-dollar deal, aiming to bring together two of the world’s most renowned designer labels under one roof.

The Prada Group announced on Thursday that the agreement, valued at approximately $1.36 billion (£1.06 billion), will significantly strengthen its position in the global luxury market.

“We aim to continue Versace’s legacy celebrating and re-interpreting its bold and timeless aesthetic,” said Prada chairman Patrizio Bertelli.

The Prada Group, already the owner of high-end labels such as Miu Miu and the luxury footwear brand Church’s, will expand its portfolio further with this acquisition.

The move positions Prada to better compete with French luxury giants like LVMH and Kering, who dominate the high-end fashion landscape.

Negotiations between Prada and Versace’s parent company, Capri Holdings, began earlier this year in February.

Interestingly, the price Prada agreed to pay is notably lower than the $2.15 billion Capri Holdings shelled out when it bought Versace back in 2018.

This new deal also takes on Versace’s existing debt, reflecting the brand’s current financial struggles amid a broader slowdown in global luxury spending. Versace has been operating at a loss, which made the sale more attractive to Capri Holdings.

In addition to Versace, Capri also owns other luxury brands like Jimmy Choo and Michael Kors.

Despite Versace’s recent challenges, Prada leadership remains optimistic about the brand’s future. “Versace has huge potential. The journey will be long and will require disciplined execution and patience,” said Andrea Guerra, chief executive officer of Prada.

Adding to the significant changes at Versace, in March, Donatella Versace stepped down from her longtime role as creative director after nearly three decades of leading the brand.

Donatella, who took charge following the tragic murder of her brother Gianni Versace in 1997, will now serve as the chief brand ambassador for Versace.

Her successor, Dario Vitale—previously the design and image director at Miu Miu—has been appointed as the new chief creative officer, signaling a fresh era for the historic fashion house.

Prada’s acquisition marks a major milestone in the luxury fashion industry, and with a “strong platform” promised by Bertelli, the future for Versace under Prada’s stewardship looks promising.