Farfetch took a step on Wednesday toward long-awaited consolidation in the world of luxury e-commerce, agreeing to buy a big stake in its longtime rival, Yoox Net-a-Porter.
The deal could help advance a goal by Yoox Net-a-Porter’s current owner, the Swiss luxury conglomerate Richemont: create a single platform for high-end brands — including Richemont holdings like Cartier and Van Cleef & Arpels — to sell their wares online. That sort of consolidation has gained urgency for the luxury industry, despite fierce competition between its main players, to counter what some see as a threat in Amazon.
It also furthers the rise of Farfetch, which was founded in 2007 and operates both as a retailer and a provider of e-commerce technology. Among its backers are the Chinese online giant Alibaba and the Pinault family, which owns the luxury giant Kering, home to Gucci, Balenciaga and other brands.
Richemont also owns a stake in Farfetch, which it took in 2020 in what industry observers said at the time was a potential first step to arranging a union of Farfetch and Yoox Net-a-Porter. Richemont said in November that it was in advanced talks to sell Yoox Net-a-Porter to Farfetch.
The deal announced on Wednesday is a step toward “building an independent, neutral online platform for the luxury industry that would be highly attractive to both luxury brands and their discerning clientele,” Johann Rupert, Richemont’s chairman, said in a statement.
Shares in Richemont and Farfetch rose after the announcement.
Under the terms of the agreement, Richemont would sell a 50.7 percent stake in Yoox Net-a-Porter to Farfetch and an investment vehicle owned by the Qatari businessman Mohamed Alabbar. In return, Richemont would receive shares in Farfetch that amount to a roughly 11 percent stake in the retailer.
Yoox Net-a-Porter would also adopt Farfetch’s online platform, potentially solving issues upgrading its technology.
The deal would leave Yoox Net-a-Porter without a controlling shareholder, but Farfetch would have the option to buy the remainder of Yoox Net-a-Porter within the next five years, while Richemont would have the right to force such a deal if certain conditions are met.
For Richemont, the deal serves multiple purposes. Not only does it potentially create a new giant in luxury e-commerce, but it also offers a way to shed a business headache. Born from the 2015 merger of Yoox and Net-a-Porter, the e-commerce unit has lost money, as well as ceded market share to rivals like Farfetch.
More recently, Richemont has faced pressure from activist investors who have called on the company to shed Yoox Net-a-Porter and focus on core brands like Cartier.
After the deal closes, which is expected by the end of 2023, Richemont would no longer carry Yoox Net-a-Porter’s losses on its books. It would take a 2.7 billion euro, or $2.7 billion, write-down from the transaction.
Source: NY Times
