SummaryCompaniesPrada acquires Versace for $1.375 billion, including debtDeal strengthens Italy's position in luxury fashion industryPrada aims to expand Versace's potential with disciplined executionUS Capri shares fall, extending downturnMILAN, April 10 (Reuters) - Prada struck a $1.38 billion deal to buy smaller rival Versace from Capri Holdings (CPRI.N), opens new tab on Thursday in a move that unites two of the biggest names in Italian fashion and offers the prospect of enhanced revenues.Prada is seeking to expand, having defied a slowdown in luxury demand, while Versace has been operating at a loss in recent quarters.Make sense of the latest trends in financial markets with the Global Investor newsletter. Sign up here.Owning Versace, with its bold, baroque-style prints, will bring new customers to Prada, known for its minimalist style."There are no overlaps in terms of creativity, in terms of customers," said Lorenzo Bertelli, marketing director and a member of the family that controls Prada.The merger strengthens Italy's hand in a luxury industry led by French conglomerates, the biggest being Louis Vuitton owner LVMH (LVMH.PA), opens new tab."We will provide (Versace) with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships," Prada Chairman Patrizio Bertelli said in a statement.Bertelli is the husband of Prada designer Miuccia Prada, and the couple are leading shareholders in the company.Prada and Capri braved the uncertainty over U.S. tariffs and market volatility to sign the deal, according to people familiar with the matter. Capri needed to divest Versace to focus on turning around its Michael Kors fashion brand, one of the sources said. For Prada, the bet on Versace comes at a time when it is looking to revive growth as its existing stable of brands start to mature, the source added.Both Prada and Versace, which have global supply chains and boast of a widespread customer base, were willing to "swallow a