Prada has agreed to buy its smaller rival Versace in a billion dollar deal to unite two of the biggest designer fashion labels. The deal to unite the two Italian brands has an estimated value of $1.36bn (£1.06bn), the Prada Group said on Thursday.

Italian fashion house Prada has announced that it has bought fellow Italian designer fashion brand Versace for €1.25 billion. ($1.38 billion).

Prada SpA agreed to buy Versace for about $1.38 billion in cash, strengthening its position as Italy’s largest fashion group by adding one of the luxury industry’s best-known brands.