Richemont Makes $3.4 Billion Offer to Take Over Yoox Net-a-Porter


“With this new step, we intend to strengthen Richemont’s presence and focus on the digital channel, which is becoming critically important in meeting luxury consumers’ needs,” Johann Rupert, the Richemont chairman, said in a news release.

The move comes after a rocky period for Richemont in recent years. Exports of Swiss watches had slumped, a crackdown on corruption in China stanched demand for luxury goods in what was becoming an increasingly important market, and global economic growth had been sluggish.

That appears to be changing, though. The group has posted strong sales growth in recent quarters, highlighting a recovery in demand for top-end Swiss mechanical watches. The broader mix of products and prices offered by its brands, in particular to younger customers, who tend to browse and buy online, has also bolstered results.

Yoox Net-a-Porter owns and operates the internet retailers Net-a-Porter, Mr Porter, the Outnet and Yoox, and also operates e-commerce sites for over 30 luxury brands, including Stella McCartney, Dolce & Gabbana and Chloé.

The company reported sales of €2.1 billion last year, up 11 percent compared to the same period a year ago, and recently unveiled ambitious plans to double the size of its business by 2020. Its archrival is Farfetch, an online marketplace for 500 independent luxury boutiques and 200 brands that is also the owner of the bricks-and-mortar store Browns in London. Farfetch is rumored to be mulling an initial public offering for later this year.

Federico Marchetti, the Yoox Net-a-Porter chief executive, has agreed to sell his shares and any he would acquire through the exercise of options in the offer. He owned about 3.9 percent of the company’s total share capital.

Richemont said that Yoox Net-a-Porter would continue to operate as a separate business, “ensuring it remains a neutral and highly attractive platform for third-party luxury brands.” Yoox Net-a-Porter’s headquarters would remain in Italy.

“Richemont aims to provide additional resources that further strengthen and accelerate YNAP’s long-term leadership in online luxury,” Mr. Marchetti said in a news release. “This means investing even more in product, technology, logistics, people and marketing.”

With much speculation over the “death of retail,” the steady decline of department stores, and the looming threat of online giants like Amazon, one bright spot in the shopping landscape has been businesses like Yoox Net-a-Porter — high-end, multibrand e-commerce companies that have attained sky-high valuations.

In December, New York-based luxury e-tailer Moda Operandi raised $165 million in its latest round of funding, just a few months after Apax Partners bought a majority stake in London-based, which had a valuation of roughly $1 billion.

In May, LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury group, made its own foray into the sector with the boutique shopping website and mobile app 24 Sèvres. Just weeks later, however, Condé Nast closed, its own high-stakes experiment in online fashion retail, a lesson to companies like Richemont that even the most reputable names in fashion can struggle if they arrive late to the game.

The Richemont deal nevertheless caught some analysts by surprise on Monday, with Luca Solca, the head of luxury goods analysis at the French bank BNP Paribas, calling it a “puzzling development,” years after Richemont had divested most of its stake in Net-a-Porter.

Sherri Malek, an analyst for RBC Capital Markets, said that there was a strong possibility of a rival bid for Yoox Net-a-Porter, given its sales growth and market position. She added that, with the large number of players entering the market and high level of competition, there could be further such deals in the sector.

“As Amazon continues to dominate the internet retail industry and focuses its efforts on penetrating the fashion category, we think this has the potential to incentivize smaller competitors to consolidate,” she wrote in a note to investors.

The Yoox Net-a-Porter deal is subject to regulatory approval and to shareholders agreeing to sell more than 90 percent of the company’s outstanding shares in the offer.

Goldman Sachs and the law firms Bonelli Erede Pappalardo and Slaughter and May were advising Richemont.

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