A business model based on European branding and Chinese manufacturing has dominated the luxury market for at least a couple of decades.

The opening shots of a global trade war mean that dealmakers have begun to think about how M&A can be used to protect the European corporates that have deployed this playbook so effectively throughout the 2000s.

There has already been one blockbuster deal announced so far in 2025. In April, Prada announced a definitive agreement to acquire 100% of fashion brand Versace from Capri Holdings for an enterprise value (EV) of EUR 1.25bn, which is subject to adjustments at closing.

The bulk of Versace manufacturing is in Italy, while Prada also mainly manufactures its products in Europe. Prada’s group CEO Andrea Guerra said at the time of the deal that the Versace brand has “huge potential,” while the integration will need disciplined execution and patience. Prada’s Versace deal was announced a week after US President Donald Trump announced his “Liberation Day” tariffs.

Robust activity

There have been 18 European luxury deals worth EUR 1bn and up since the beginning of 2015, according to Mergermarket data. The busiest years have been 2017 (four blockbuster deals), 2018 and 2023 (three apiece) and 2020 and 2021 (two apiece).

There was a deal per year in 2015, 2016 and 2019, with no deals of this size in 2022 or 2024. There have been two European megadeals in the luxury segment with values above EUR 10bn in the last 10 years: the takeover of Luxottica by Essilor, which was announced in 2017 and closed in 2018; and LVMH’s takeover of Christian Dior, also in 2017.

In general, market uncertainties will tend to push leading players to a wait-and-see attitude for large deals, according to Marc Petitier, EMEA M&A Partner at White & Case.

Although megadeals are few and far between, smaller deals are also likely as dealmakers and executives adjust to tariffs. M&A activity in the sector is “likely to remain robust,” Petitier said.

Drivers include “corporate bolt-on acquisitions aimed at adapting to evolving consumer trends in an industry that constantly seeks to attract new wealthy buyers,” he said.

The luxury sector is a global one. Price increases in the US will lead to higher prices worldwide, one M&A lawyer said, adding that there is a risk of illegal distribution chains emerging as a way of outflanking import controls.

Smaller defensive deals are also possible. French luxury group Chanel has been active. It has already bought two partners with Made in Italy branding so far this year: Grey Mer in March and Mantero in April.

At the same time, tougher pricing could lead to disposals, dealmakers said. While jewellery and high-end accessories can maintain strong demand with high prices, categories like wines, spirits, gourmet foods, and sports cars face greater substitution risk from local alternatives when prices climb too high.

Europe -Top luxury deals valued more than EUR 1bn+ (2015-2025)

Names to watch

Companies to watch in the months ahead include Moet Hennessy. Diageo’s 34% stake in the champagnes, spirits, and wines company is held via a joint venture with luxury giant LVMH. Diago’s stake was flagged as a potential disposal or as a candidate for shareholder activists by The Morning Flash at the beginning of the year, although the company has denied any intent to sell.

The Morning Flash also noted a steep share-price fall at luxury house Kering, which runs the Gucci brand. Deals could be used to revive the fortunes of the stock.

Finally, Permira-backed luxury shoe manufacturer Golden Goose pulled back an initial public offer (IPO) last year. At the time, it raised the possibility of a second attempt this year.

An outsourcing model that worked so well with globalised markets will need to be tweaked in a protectionist world, and M&A can be part of the solution.