Prada struck a $1.375 billion deal to buy smaller rival Versace from Capri Holdings on Thursday, including its debt, in a move that unites two of the biggest names in Italian fashion. Prada is seeking to expand, having defied a slowdown in luxury demand, while Versace has been operating at a loss in the last few quarters.

The merger strengthens Italy’s hand in a luxury industry led by French conglomerates, the biggest being Louis Vuitton owner LVMH. The deal follows the announcement on March 13 that Donatella Versace was stepping down as the chief creative officer of the brand founded by her late brother Gianni.