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Richemont sells controlling stake in Yoox Net-a-Porter, takes US$2.7bn hit

(Source: Yoox Net-a-Porter)

Luxury fashion group Richemont has sold a controlling stake in loss-making online fashion retailer Yoox Net-a-Porter (YNAP), paving the way for a potential takeover by rival Farfetch in the future.

Richemont says it sold a 47.5 per cent stake in the business to Farfetch and a 3.2 per cent stake to Middle East investment firm Symphony Global. The Swiss company bought 95 per cent of YNAP in 2018, and will retain 44.3 per cent – at least for now. It will carry a €2.7 billion writedown on the sale.

The deal, first reported by The Business of Fashion, leaves YNAP as a neutral platform with no single controlling shareholder.

“This investment and work we will do with Farfetch Platform Solutions for YNAP will pave the way to a potential acquisition by Farfetch, which would create a complementary portfolio of iconic luxury destinations, appealing to different demographics, price points and regions,” said Farfetch CEO Jose Neves in a statement.

Johann Rupert, chairman of Richemont, said the sale represented a significant step towards “the realisation of a dream I first voiced in 2015 of building an independent, neutral online platform for the luxury industry that would be highly attractive to both luxury brands and their discerning clientele”. 

Under the agreement, Richemont and YNAP will adopt Farfetch’s technology platform to advance its ‘Luxury New Retail’ program. Richemont Maisons will also open e-concessions on the Farfetch Marketplace reflecting a change in Farfetch’s strategy for hard luxury – which represents more than 20 per cent of the luxury industry globally, but just 3 per cent of Farfetch sales. 

Meanwhile, the partnership with Mohamed Alabbar-owned investment arm will see 3.2 per cent interest in YNAP exchanged for Symphony Global’s shares in the joint venture in YNAP in the Gulf Cooperation Council region. As a result of this share swap, YNAP will own 100 per cent of its business in the region.

“The carrying value of this investment will be written down to the expected fair value less costs to sell, resulting in a charge to the consolidated income statement of the group,” Richemont said in a statement. “Richemont currently assesses the write down to be approximately 2.7 billion euro”. 

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