Prada is close to a tie-up with Swiss watch and jewelry maker Richemont that could shake up the luxury landscape worldwide, sources told The Post.
The Italian fashion house — whose ambitions to expand have been hampered for years by a crippling debt load — is nearing a deal to sell about a third of the cash-strapped label to Richemont, whose holdings include Cartier, Montblanc and Van Cleef & Arpels.
Richemont is expected to take a passive stake under the terms of the deal, which is still subject to sensitive negotiations, sources said. Insiders close to the companies believe Richemont could eventually take control of Prada with a majority investment.
The deal is a far cry from Prada’s long-held ambition to go public. Nevertheless, the duo could create a global luxury powerhouse to compete with Richemont’s larger rival, LVMH. Combined, Richemont and Prada would be better equipped to expand into fast-growing markets like China.
Prada’s Italian lenders, Intesa Sanpaolo and Unicredit, initially approached Richemont about a minority stake last year, but their asking price was too steep, valuing Prada at about $3.8 billion, sources said.
Prada over the past decade has repeatedly announced plans for an initial public offering to fund its growth, only to withdraw amid lackluster market conditions. Last June, Prada said it turned down offers from private-equity shops, with suitors reportedly including the Carlyle Group, TPG and the Qatar Investment Authority.
Prada officials, who denied reports that the label was selling a minority stake as recently as August, didn’t return phone calls yesterday. Richemont officials also didn’t respond to requests for comment.
Since last summer, the lenders and Prada’s owners — the legendary designer Miuccia Prada and her notoriously volatile husband, Patrizio Bertelli — appear to have backed off their lofty asking price as they face better-funded competitors like Gucci and Dolce & Gabbana, sources said.
CEO Bertelli got Prada into a tight spot as he amassed $1.7 billion in debt for the company and family with a series of disastrous acquisitions, including Jil Sander, Helmut Lang and Fendi. While Prada recently pushed back due dates on those loans, interest payments are still squeezing cash flow.
Bertelli, who together with his wife owns 95 percent of Prada, is said to have once thrown thousands of dollars’ worth of handbags from a window after judging them to be poorly designed. He also famously smashed a mirror at Prada’s Prince Street boutique to express his displeasure over installation of uneven wallboards.
“It will be interesting to see how [Bertelli] gets along with Richemont,” a notoriously conservative company, said one source close to the negotiations.
Nevertheless, sources said Richemont’s CEO Johann Rupert, a reclusive South African business tycoon, is now focused on expanding into the apparel and accessories business. In addition, Rupert shares the high-culture sensibility of designer Miuccia Prada.
“Both of them are protective of their brands, and they detest all of the vulgar celebrity culture,” according to one source. “That’s one place you won’t expect a lot of arguments between them.” james.covert@nypost.com