Sri Lanka, April 13 -- Prada has agreed to acquire Italian fashion house Versace for $1.38 billion from Capri Holdings, foreign media reported, in a major move that unites two of the biggest names in Italian luxury. The deal, which includes Versace's debt, is expected to bolster Prada's growth ambitions by combining its minimalist sophistication with Versace's bold, baroque aesthetic. Prada, which has largely defied the recent global slowdown in luxury demand, sees the acquisition as a long-term strategic investment aimed at expanding revenues rather than cutting costs.

"There are no overlaps in terms of creativity, in terms of customers," said Lorenzo Bertelli, marketing director and son of Miuccia Prada and Patrizio Bertelli, who contr...