On Thursday, the Prada Group announced an agreement to acquire Italian fashion label Versace from U.S.-based luxury conglomerate Capri Holdings in a deal valuing the brand at 1.25 billion euros (approximately $1.4 billion).

Prada described Versace’s “highly recognizable aesthetic” as a “strongly complementary addition” to its existing portfolio, which includes its flagship Prada brand along with Miu Miu. The company also noted that Milan-based Versace holds “significant untapped growth potential.”

The deal’s final value will be determined at closing, anticipated in the latter half of the year. It will be financed through 1.5 billion euros in new debt and has received approval from the boards of both Prada and Capri Holdings.

In a statement, Prada said Versace would “retain its creative DNA and cultural authenticity” while also gaining from the Group’s “considerable consolidated platform,” including its manufacturing capabilities, retail operations, and overall business expertise.

Versace, established in 1978 by the late Gianni Versace, has been under Capri Holdings’ ownership since 2018. Capri’s portfolio also includes the Michael Kors and Jimmy Choo brands.

Although Capri Holdings acquired Versace for $2 billion, the company has faced challenges repositioning the iconic Italian label—renowned for its bold designs and provocative style—amid the trend toward “quiet luxury.”

Last month, Capri appointed Dario Vitale as Versace’s new creative director, succeeding Donatella Versace, who had taken the role after her brother’s murder in 1997. Vitale previously worked at Miu Miu, the Prada Group’s youth-oriented brand.

Donatella Versace was named chief brand ambassador in the leadership reshuffle, a move widely seen as paving the way for the much-speculated Prada acquisition. Miuccia Prada had hinted at the Group’s interest during Milan Fashion Week in February.