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.

The deal is a sign of faith in the continued value of Made in Italy at a time when the financial markets are in chaos because of President Trump’s whipsawing tariff policies. And it marks the end of Capri’s attempt to create an American luxury group to rival LVMH and Kering, while signaling an attempt by Prada to create an Italian competitor to the powerhouses.

“It’s a bold and ambitious move by Prada,” said Robert Burke, the eponymous founder of Robert Burke Associates. “The acquisition would position Prada to diversify its portfolio and compete on a larger global stage.”

Versace will join Prada and Miu Miu, as well as Luna Rossa, the America’s Cup sailing team, and the pastry brand Marchesi as part of the Prada Group, creating a “best in class” mosaic of Italian savoir-faire. (The group also includes the footwear brands Car Shoe and Church’s.)

It also gives the Prada Group’s fashion holding critical mass, adding a ready-to-wear brand with a notably different identity to those of Miu Miu and Prada — as well as one that is not dependent on the designer Miuccia Prada — to the mix.

In a news release, Andrea Guerra, Prada Group’s chief executive, said the acquisition would add, “a new dimension, different and complementary,” to the Group. “Versace has huge potential,” he added, while noting, “the journey will be long.”

Prada plans to fund the acquisition with debt, borrowing more than one billion euros. The plan was approved by both companies’ boards and they expect the deal to close in the second half of the year, pending approval by regulators.

The Prada Group has been the rare success story during a general downturn in the luxury market, reporting 2024 revenues of €5.4 billion, a 17 percent increase, driven in part by the tremendous recent success of Miu Miu, which experienced retail sales growth of 93 percent last year.

By contrast, in its most recent financial report Capri, which also owns Michael Kors and Jimmy Choo, said it expected Versace revenues to drop to $810 million in its current fiscal year, from $1 billion in 2024. Versace has been seen as a potential acquisition target since an attempt by Tapestry, the group that includes Coach and Kate Spade, to acquire Capri was blocked last year by the Federal Trade Commission. (Speculation that Prada would also buy Jimmy Choo, given its expertise in leather goods, was not borne out.)

“The Versace business is in need of a complete turnaround,” said Luca Solca, a senior analyst with the research firm Bernstein. At the same time, he added, Prada’s track record with acquisitions “leaves much to be desired.”

Indeed, the Versace takeover is not Prada’s first try to extend its winning formula to other brands. In 1999, after a decade in which it helped define Italian fashion, Prada went on a buying spree, acquiring Jil Sander and Helmut Lang, two brands that seemed to share an intellectual approach to dressing with the group’s core brand. It turned out, however, that the alchemy Miuccia Prada and her husband, Patrizio Bertelli created at Prada was not transferable. The group sold Lang in 2005 and it divested Sander the following year.

Versace will give them the opportunity to rewrite that narrative.

Prada and Versace are, on the surface, a study in contrasts. Versace made its name on a celebration of flash and fantasy, reveling in sun, sex, the male gaze and the tightrope between bad taste and elegance. Prada, by contrast, embraced a contrarian exploration of the meaning of femininity, gender politics and the strange allure of ugly chic.

But, Mr. Bertelli said in the news release, “we share a strong commitment to creativity, craftsmanship and heritage,” as well as an understanding of the consumer power of brand semiology — the upside triangle, the medusa head — and a belief in the importance of family.

Mrs. Prada is close to Donatella Versace, who stepped in to run the company her brother Gianni founded in 1997 after his assassination; though Ms. Versace left her position as chief creative officer last month after almost 30 years, she remains chief brand ambassador, and has always felt an enormous sense of responsibility to ensure the future of her brother’s legacy. She is reportedly “delighted’ to have her brand back in family hands.

Though the Prada Group is listed on the Hong Kong Stock Exchange, Mr. Bertelli remains chairman. Lorenzo Bertelli, one of Mr. Bertelli and Mrs. Prada’s two sons, is chief marketing officer and considered the heir apparent to the company, which was founded in 1913 by Mrs. Prada’s grandfather. Even the designer who took Ms. Versace’s place at Versace, Dario Vitale, had spent the previous 14 years at Miu Miu working with Mrs. Prada (who is creative director of Miu Miu and co-creative director of Prada with Raf Simons), ultimately rising to become her second in command before decamping to Versace. He is effectively coming home.

Capri, on the other hand, has a much shorter genealogy. The group was created in 2018 when Michael Kors bought Versace for $2.1 billion, following its acquisition of Jimmy Choo. At the time, crowed chief executive John Idol, the Versace deal signaled “our latest step in creating one of the world’s leading fashion and luxury groups.”

Now Mr. Guerra of Prada might say something similar.