Sergio Rossi will be appointed chairman of the company and will continue as the director of design, while Massimo Braglia, a Gucci executive, will become chief executive. The Sergio Rossi group is one of Italy's smaller fashion names, with 1999 sales of only about 110 billion lire. But it is quite strong in luxury shoes for women, for which it has several of its own brands. It also produces footwear for a number of leading fashion houses, including Versace and Dolce & Gabbana.

Mr. Rossi, who founded the company in the 1950s, decided this year to cede control because he found it increasingly difficult to respond to the demand for ever larger investments in distribution and communications to compete with much larger, global groups. Gucci Chief Executive Domenico De Sole said his company plans to apply its expertise in brand management and its distribution strength to promote Sergio Rossi world-wide. While Sergio Rossi has a handful of directly operated stories in Europe and the U.S., Gucci plans to add to this network and extend it to the Asian market, Mr. De Sole said in an interview. "It's a great company," Mr. De Sole said, adding, "The brand name is well-known in America, but they've barely even started in Asia." The accord follows Gucci's purchase earlier this week of France's Sanofi Beaute, which controls Yves Saint Laurent, among other brand names.

Gucci has a $2 billion (1.92 billion euros) war chest to spend to achieve its goal of transforming itself into a multibrandluxury goods group. Mr. De Sole declined to say what acquisitions the group is considering next. In winning the hand of Sergio Rossi, Mr. De Sole beat out several other contenders. In recent months, the Bologna-based group was being courted by Prada and Valentino, said a person close to the company.

Prada and Gucci have gone head-to-head several times over the past year, starting with the purchase by Prada of a significant stake in its Florence-based rival, which it later sold. More recently, Prada beat out Gucci in the acquisition of Roman fashion house, Fendi. Prada and French luxury-goods group LVMH Moet Hennessy Louis Vuitton SA bought Fendi last month for an estimated $850 million after Gucci dropped out, claiming the price had gone too high.

The Italian luxury goods market has been an active one this year, having been swept up in the sector's world-wide consolidation. Furthermore, many Italian companies are family-run, with owners now facing the issue of the generational passage of control.