Italian Web-based clothier Yoox SpA is buying Net-A-Porter, the high-end fashion site controlled by Cie. Financière Richemont SA, in an all-stock deal as the two companies look to cement their presence in the small-but- increasingly-competitive online market for luxury goods.
On Tuesday Richemont said it would sell Net-A-Porter in return for a half of the combined business, which will retain Yoox’s stock-market listing in Milan. The combined company, to be called Yoox Net-A-Porter Group, will have yearly revenue of more than $1.4 billion.
Yoox Net-A-Porter will be valued at about EUR2.6 billion ($2.82 billion) after the two businesses combine, which is contingent on Yoox shareholders approving the deal at a June meeting.
The deal represents a bet that the two well-known websites for luxury clothing and accessories will fare better by pooling their resources and expertise as the market becomes more crowded. Online retail giants such as Amazon.com Inc. and Alibaba Group are increasingly branching out into luxury products, while department stores like Neiman Marcus Group and Saks Fifth Avenue are selling more of their inventory over the Internet and offering the convenience of returns at their physical stores.
The sale represents a turnaround for Richemont, which was an early investor in Net-A-Porter, but will be the junior partner in the combined company. Despite owning half of the new company, Richemont’s voting rights will be limited to 25%, a move it says is designed to protect the independence of Yoox Net-A-Porter, and two of its 12-14 board seats.
Since acquiring control in 2010, Richemont has struggled to bring the fashion magazine-themed site to sustainable profitability as the costs of new distribution centers weigh on its performance. Last year, Net-A-Porter posted a loss of GBP10 million ($14.8 million), according to analyst estimates.
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