The Prada Group has agreed to buy rival Versace from the U.S. luxury group Capri Holdings in a deal valuing the Milan fashion house at 1.25 billion euros ($1.4 billion.)

Prada Group has officially decided to acquire Versace in a deal worth $1.38 billion, marking a significant shift in the global luxury fashion landscape.

The price Prada has agreed to pay for Versace is a big discount to the roughly $2.15 billion including debt that Capri paid for Versace in 2018. Previously known as Michael Kors, Capri bought Versace from the Versace family and Blackstone.

Prada's $1.3 billion acquisition of Versace strengthens Italy's hand in the luxury industry led by French conglomerates.

The Prada Group has announced the purchase of the Versace fashion house from the U.S. luxury group Capri Holding in a cash deal valued at 1.25 billion euros ($1.4 billion

Prada said Thursday that it had reached a deal to buy Versace for 1.25 billion euros ($1.38 billion), building a new Italian fashion powerhouse and hoping to insert much-needed "spark"

The purchase, the largest in Prada’s 112-year history, returns Versace to Italian ownership and could put the company in a better position to compete with bigger luxury rivals such as LVMH and Kering SA.

On Thursday, in the biggest luxury deal of the year, Prada announced it was buying Versace for 1.25 billion euros ($1.38 billion) from Capri Holdings, a beleaguered New York group that at one point styled itself as the American answer to the great fashion groups of France.

Prada will buy rival fashion house Versace for $1.4 billion in a deal uniting the two biggest names in Italian luxury, the brands announced Thursday. The deal is part of a series of shakeups at Versace,