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The post “Liberation Day” whiplash has been course-altering for everyone—not least Italian luxury brand Prada, which is ironing out the final details of its rumored acquisition of Versace.
But a good thing might come of it for Hong Kong-listed Prada: it might have won itself a $200 million discount on a deal valued at $1.4 billion with U.S.-based Versace owner, Capri Holdings.
The deal, which is inching closer to the finish line, was reportedly negotiated down from an initial price of $1.6 billion owing to trade-related uncertainties, the Financial Times reported, citing people with direct knowledge of the matter.
After months of speculation and anticipation, this week, all tidings point to a deal between the two Italian luxury labels coming to a close.
The deal would not only be a big win for Prada but also “makes sense both financially and strategically,” Morningstar’s senior equity analyst Jelena Sokolova said in a note last month. Since the two companies have distinct aesthetics—Versace is bold and maximalist, while Prada’s Miu Miu is more understated—they could complement one another.
“By acquiring businesses of different character, brands can help protect themselves and smooth the cyclicality of performance. Prada has a strong track record of running luxury brands that Versace's current owner Capri Holdings lacks in comparison,” Sokolova added.
Tariffs have set off a new degree of uncertainty for luxury companies just as they claw out of a historic slump in demand. Luxury companies’ shares have also taken a beating following the announcement of 20% tariffs on Europe last week.
Analysts told Fortune that while the luxury sector can cope with the immediate impact of tariffs by raising price tags without turning away shoppers, a global trade war could dampen consumer sentiment, creating harsher consequences in the medium term.
With President Donald Trump suspending tariffs for 90 days (except in China), companies will have some respite to strategize how they might adapt. It’s unclear if the stopgap measure will further change Versace’s purchase price.
Representatives at Prada and Capri Holdings didn’t immediately return Fortune’s request for comment.
When Prada meets Versace
Capri, which also owns Jimmy Choo and Michael Kors, bought Versace for $2.1 billion in 2018 to expand its portfolio of brands and compete with Europe’s heavyweights.
Versace was also Capri’s foray into more high-end products, as its previous brands focused on affordable luxury.
The Italian label, which was previously family-owned, would be able to reach more customers with the backing of a fashion-focused parent group.