By Ben Dummett and Lauren Thomas

Prada's talks to acquire Versace from fashion conglomerate Capri Holdings are at risk of collapsing at the 11th hour with financial markets in historic turmoil, according to people familiar with the matter.

Prada has a tentative deal to acquire Versace from Capri for roughly $1.4 billion, which could be announced as soon as Thursday morning. But Prada's namesake family still have to sign off on the agreement, the people added.

As of Wednesday morning, the likelihood of a deal was still 50-50, one of the people said.

The market swings and the uncertain impact of tariffs, which have slammed into luxury retail, are complicating the two sides' coming to a final pact.

The uncertain deal talks offer the latest example of how President Trump's escalating trade war is wreaking havoc across Wall Street and forcing companies to rethink big decisions. The retail industry in particular has been hit hard.

Versace, which was founded more than 40 years ago, is an Italian fashion house known for its flashy and sometimes risqué designs. Last month Capri appointed Dario Vitale to succeed Donatella Versace as chief creative officer of the Versace brand.

Capri, whose stable of luxury brands also include Michael Kors and Jimmy Choo, struck a $2.1 billion deal for the Versace business in 2018 as part of a plan to create a global luxury fashion group.

In 2023, Capri had agreed to sell itself to Coach owner Tapestry for $8.5 billion. That deal died the next year, however, after the Federal Trade Commission said the tie-up would hurt competition in the market for affordable luxury handbags.

The scuttled Tapestry deal along with Versace's poor performance had heaped pressure on Capri to sell the struggling business.

Capri and other purveyors of luxury brands are grappling with weak demand as shoppers rein in spending on pricey products. Trump's tariffs have exacerbated that challenge by forcing the industry to deal with the prospect of higher costs to source raw materials from Asia and raising the likelihood of a recession.

Shares of Prada, which is based in Milan but listed in Hong Kong, fell 1.2% on Wednesday and are down more than 15% over the past five trading days. Capri shares fell less than 1% Wednesday morning, with the stock down more than 40% year to date.

Write to Ben Dummett at ben.dummett@wsj.com and Lauren Thomas at lauren.thomas@wsj.com

(END) Dow Jones Newswires

April 09, 2025 12:22 ET (16:22 GMT)

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