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.

"We aim to continue Versace's legacy celebrating and re-interpreting its bold and timeless aesthetic," said Prada chairman Patrizio Bertelli.

The Prada Group already owns several other designer labels including Miu Miu and luxury footwear brand Church's.

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