Luxury major Prada will buy Versace for $1.38 billion from American parent company Capri Holdings.

The long-anticipated deal will bring together two leading Italian labels in the luxury segment, albeit with diverging fortunes.

“The acquisition of Versace marks another step in the evolutionary journey of our Group, adding a new dimension, different and complementary,” Andrea Guerra, CEO of Prada, said in a release. “Versace has huge potential. The journey will be long and will require disciplined execution and patience.”

Speculation before the deal’s finalization suggested Prada had negotiated down its initial purchase price of Versace owing to tariff-related pressures.

The purchase, which is Prada’s largest in its 112-year history, could be a big boost for the company amid a period of sector-defying growth.

Prada reported a 15% jump in annual net sales worth €5.4 billion ($6 billion) in March. Miu Miu, Prada’s sister brand, has been instrumental in the company’s recent growth streak, as its revenues soared by 93% last year.

Prada’s acquisition of Versace makes “strategic sense since both of these brands pass through fashion cycles and ownership of multiple brands with very different aesthetics (maximalist for Versace and minimalist for Prada and Miu Miu) could help smooth the cyclicality of performance,” Morningstar’s senior equity analyst Jelena Sokolova said in a note Thursday.

The deal comes at a tricky time for luxury purveyors, many of whom have been impacted by a pull-back in consumer spending. Tariffs would have added yet another hurdle for the sector by hurting consumer sentiment and pushing prices up. However, a 90-day pause on the levies against Europe could give companies more time to strategize their path forward.

Prada’s shares were up nearly 5% as of 2 p.m. London time.

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Good morning!

After one of the most volatile mornings for Wall Street in recent memory, President Donald Trump announced a pause on much of his tariff policy yesterday. And although the business world’s response was overwhelmingly positive, labor economists say the pivot is only a temporary reprieve for an already-troubled hiring landscape.  

“It’s going to give a little bit of certainty to businesses in the short term,” Cory Stahle, an economist at Indeed’s Hiring Lab tells Fortune. But “even though this is a pause, there wasn’t necessarily a full backing down. So there still is some looming uncertainty out there.”

Trump previously announced massive levies on some of America’s largest trading partners in a sweeping policy shakeup that he dubbed “Liberation Day.” In a Wednesday social media post, however, he said those plans would be put on a 90-day hiatus, and instead put a blanket 10% tariffs on all U.S. trading partners. The exception is China, which has now been assigned tariffs of 125% up from an already-high 104%. 

To say the news was a boost to the markets is an understatement. The S&P 500 went up 9.5%, while the Dow jumped by 7.8% before trading closed for the day. Financiers like Bill Ackman, who previously warned that the tariffs would cause a “self-induced, economic nuclear winter,” were quick to celebrate the news, praising Trump and calling the policy change “brilliantly executed.” 

But not everyone was so enthusiastic. The market wil “likely go higher for a few days, but I think permanent damage has been done,” Jake Schurmeier, portfolio manager at Harbor Capital and a former member of the Federal Reserve Bank of New York’s Markets Group, told Fortune on Wednesday. 

Although the pause is certainly good news for businesses staring down the prospect of lower revenue and potential hiring pullbacks if not outright layoffs, Trump’s pivot has only delayed the dread that has already permeated corporate America. Many companies have been trapped in a holding pattern as they try to figure out how to navigate a series of major changes over the past few months, including a presidential election, and subsequent workplace-related executive orders. 

It’s true that topline unemployment numbers remain low, but they cover up some troubling truths: Many of the massive federal layoffs haven’t showed up in the data yet, and the fact that a significant portion of job seekers are taking more than six months to find a role. Hiring is also most often a long process, and savvy businesses aren’t just thinking one quarter ahead of time, says Stahl. 

“The labor market has been mostly paralyzed, mostly frozen,” he says. “It’s been a continued story of: What policies are going to happen from day to day? So I don’t think that this gives businesses a ton more certainty that they need to start going on a hiring spree.”

Azure Gilman
Azure.gilman@fortune.com

Brit Morse
brit.morse@fortune.com

This story was originally featured on Fortune.com

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