The two Italian houses said Tuesday they will each acquire a 40 percent share in Filati Biagioli Modesto, a cashmere yarn supplier based in the Tuscan province of Pistoia that counts Prada and Zegna, as well as Louis Vuitton, Dior, Chanel, Armani and Moncler, among its customers. The value of the deal was not disclosed.

The Biagioli family will retain a 15 percent stake in the business. The remaining 5 percent will be owned by textile industry veteran Renato Cotto, who is taking on the role of chief executive at the manufacturer.

Zegna Group chief executive Gildo Zegna and Prada group chief executive Patrizio Bertelli will join the company’s board, with Zegna serving as chairman.

Chanel, LVMH, Burberry have all been playing a role in vertical integration in the Italian fashion sector, buying up tanneries and handbag factories. The moves come as Italy’s famously fragmented manufacturing system risks further consolidation amid a downturn in the market and as the ageing leaders of its small, family-owned suppliers struggle to plan for their companies’ next generation. The total number of companies in Italy’s fashion sector have fallen by 20,000 since 2011, according to national fashion chamber CNMI.