Farfetch and luxury goods company Richemont have been given the green light by European authorities for their proposed acquisition deal with Yoox Net-A-Porter (YNAP). Richemont announced on Monday that the European Commission has cleared the deal, which involves Farfetch purchasing a 47.5% stake in YNAP in exchange for Farfetch Class A ordinary shares. However, certain conditions still need to be met before the deal can be finalized.
The agreement, which was announced in August 2022, sees Richemont selling a 47.5% stake in YNAP to Farfetch in exchange for over 50 million shares of the company. In addition, Farfetch has the option to acquire the remaining shares of YNAP through a put and call option arrangement.
One of the main challenges facing the deal is Farfetch’s financial struggles. The company has been affected by reduced orders from US retailers and an increase in brand-owned inventory, which has hindered its ability to attract shoppers with promotional activities. Despite being a pioneer in the online luxury sales space and successfully convincing luxury brands to embrace e-commerce, Farfetch has yet to reach profitability due to high technology and marketing costs.
The approval from European authorities brings Farfetch one step closer to finalizing the deal and solidifies its position in the online luxury retail market. YNAP is a highly regarded name in the industry, best known for its luxury e-commerce platforms Net-A-Porter and Mr Porter. By acquiring a significant stake in YNAP, Farfetch aims to broaden its reach and expand its product offerings in the luxury segment.
The completion of the deal is eagerly anticipated by industry observers, as it represents a remarkable development in the online luxury retail landscape. The consolidation of Farfetch and YNAP’s resources and expertise has the potential to reshape the dynamics of the industry and drive further growth in the luxury e-commerce market.
Both Farfetch and Richemont are committed to fulfilling the remaining conditions of the deal and are actively working towards its successful completion. Richemont will provide updates on the progress of the acquisition in due course.
Overall, the approval of the Farfetch and Richemont deal by the European Union is a significant milestone in the strategic plans of both companies and will undeniably shape the future of online luxury retail. With their combined resources and expertise, Farfetch and YNAP are poised to strengthen their positions in the market and deliver an enhanced luxury shopping experience to customers worldwide.
