In an effort to protect the “uniqueness” of the luxury industry amid stiff competition from technological powerhouses, Compagnie Financière Richemont SA said it has signed an agreement to merge its luxury online retail store, Net-a-Porter, with Italian online fashion retailer Yoox S.p.A. The all-shares deal will result in Richemont and Yoox’s own technological powerhouse, renamed Yoox Net-A-Porter Group, with estimated yearly revenue of around $1.4 billion.
The firm will go up against other tech giants, like Amazon.com Inc., which was also rumored last week to be interested in acquiring Net-A-Porter for $2 billion.
Yoox, a global Internet retailing partner of leading fashion brands such as Balmain and Gucci, is incorporated in Italy and listed on the Italian stock exchange as a publicly traded company.
Net-a-Porter, founded in 2000 by Natalie Massenet and acquired by Richemont in 2010, sells high-end brands, including Valentino and Guiseppe Zanotti, in the e-commerce marketplace. Yoox Net-A-Porter Group will be incorporated in Italy and listed on the Italian stock exchange.
Massenet, founder and executive chairman of Net-A-Porter, will be executive chairman, and Federico Marchetti, founder and CEO of Yoox Group, will be CEO of the combined entity.
“Established business models are being increasingly disrupted by the technological giants. It is with this in mind that we believe it is important to increase leadership and size to protect the uniqueness of the luxury industry,” said Johann Rupert, chairman of Richemont, in a statement this morning. “The merger of the two leaders will further enhance an independent, neutral platform for a sophisticated clientele looking for luxury brands.”
Richemont said it will receive, in aggregate and on a fully diluted basis, 50 percent of the share capital of the combined entity’s listed parent company, and its voting rights will be limited to 25 percent to preserve the independence of Yoox Net-A-Porter Group.
The deal is pending shareholder and regulatory approval, which Richemont expects to be completed by September 2015. Once finalized, the transaction will result in a one-off, non-cash accounting gain of approximately 317 million euros (about $340 million) for Richemont.