Yoox SpA agreed to buy Cie. Financiere Richemont SA’s Net-a-Porter business in an all-stock deal that creates the world’s biggest online luxury-goods retailer.
The transaction will give Richemont a 50 percent stake in a new company named Yoox Net-a-Porter Group, the Geneva-based owner of the Cartier and Chloe brands said in a statement Tuesday. The entity will have annual revenue of 1.3 billion euros and a market value of about 3 billion euros, based on yesterday’s close. Yoox’s founder, Federico Marchetti, will be chief executive officer, while Net-A-Porter founder Natalie Massenet will be chairman.
The combined company will have more heft in the market as competition intensifies in Web retailing of luxury goods. Department stores are moving online and online malls such as Amazon.com Inc. are developing dedicated sections. Neiman Marcus Group Ltd. agreed to buy Mytheresa.com in September.
The transaction is positive for Richemont as the combination will improve profitability “considerably” over the next three years, according to Alessandro Migliorini, an analyst at Mirabaud Securities LLP. “The newly formed venture will have more clout against the tech giants that have been encroaching the luxury arena.”
Yoox rose 11 percent to 25.85 euros in Milan. Richemont fell 2.1 percent to 78.30 Swiss francs, giving the company a market value of about 45 billion francs ($46.3 billion).
“Yoox shareholders look to have acquired this asset at relatively good value in the context of online valuations,” Simon Bowler, an analyst at Exane BNP Paribas, wrote in a report today.
In effect, Yoox will be paying with stock valued at about 719 million euros to get its hands on Net-a-Porter, two years after talks stalled. Richemont’s voting rights will be limited to 25 percent to ensure Yoox Net-a-Porter’s independence, and the Swiss company also will get two seats on the board. Richemont said it expects a one-time gain of about 317 million euros from the transaction. The company will be prohibited from selling half its stake for three years.
“Today, we open the doors to the world’s biggest luxury fashion store,” Massenet said in a statement from both companies. Massenet, a former fashion journalist and chairman of the British Fashion Council, founded Net-a-Porter in 2000.
The combined businesses had adjusted earnings before interest, tax, depreciation and amortization of about 108 million euros last year, the companies said.
Yoox Net-a-Porter plans to sell as much as 200 million euros of stock after the transaction to raise funds for expansion and gain new shareholders, said Richemont, which will invest in the offering.
Earlier negotiations between Richemont and Yoox stalled in 2013. Richemont has held talks with banks to discuss options for Net-a-Porter, people familiar with the situation told Bloomberg News in November. These included a sale or an initial public offering of the London-based company, the people said at the time.
“This is a game-changing merger between two pioneering companies that have already radically transformed the marketplace since 2000 and will now shift the industry paradigm once again,” Marchetti said in the statement.
Goldman Sachs Group Inc. advised Yoox while Lazard Ltd. and Nomura Holdings Inc. advised Richemont.