MILAN, April 6 (Reuters) - Italian luxury group Prada

is set to make a decision this week about a potential

takeover of smaller rival Versace, a source close to the matter

said on Sunday, as the negotiations enter a final phase.

A deal to buy Versace, owned by New York-based Capri

Holdings ( CPRI ), would unite two of the biggest names in

Italian fashion.

Italy's Corriere della Sera newspaper reported on Sunday

that a potential deal could be announced on Thursday, April 10

and the price for loss-making Versace could be reduced to 1

billion euros ($1.1 billion), one third lower than initial

reports had indicated.

Italian daily La Repubblica reported on Saturday that Capri

Holdings' ( CPRI ) Chief Executive John Idol is expected in Milan in the

coming days to discuss the deal.

Prada got exclusive four-week access to Versace financial

data in late February, a period which has since been extended,

according to media reports.

President Donald Trump's new tariffs have since sent

shockwaves through global markets, adding an extra layer of

complexity to the negotiations.

Versace, where former Miu Miu designer Dario Vitale assumed

Donatella Versace's role as Chief Creative Officer this month,

was bought by Capri Holdings ( CPRI ) for 1.8 billion euros in 2018, but

has recently been operating at a loss.

($1 = 0.9128 euros)