Italian fashion house Prada has announced that it has reached an agreement with US group Capri Holdings to buy Versace for 1.25 billion euros.

The acquisition will create a luxury goods group with revenues of more than €6 billion that will be able to compete with industry giants such as French conglomerates LVMH and Kering.

In 2018, Capri Holdings paid €1.83 billion to acquire Versace, which was previously 80% owned by the Versace family and 20% by US investment fund BlackRock.

Amid declining global sales, it put the Milan-based brand up for sale and in late February began exclusive talks with Prada.

Capri, which also owns Jimmy Choo and Michael Kors, had to accept a lower price from Prada because of the market turmoil caused by US President Donald Trump's tariffs.

Last month, Donatella Versace stepped down as creative director after more than 30 years in the post. She took over in 1997 after the murder of her older brother Gianni, who founded the Milan-based brand in 1978.

On April 1, Donatella was replaced as creative director by Dario Vitale, who oversaw a sharp increase in sales of Miu Miu, Prada's sister brand aimed at a younger clientele.

Donatella Versace, who turns 70 in May, is now the brand's chief ambassador. | BGNES, AFP