Luxury conglomerate Richemont has recently announced a major deal involving the sale of its stakes in Yoox Net-A-Porter (YNAP) to Farfetch and Alabbar. Under the agreement, Farfetch will acquire a 47.5% stake in YNAP, while Alabbar will acquire a 3.2% stake. This transformative deal will turn YNAP into a neutral platform with no controlling shareholder, though Farfetch has the option to acquire the remaining stake in the future. The implications of this deal are significant for both YNAP and Richemont’s own brands.
As part of the agreement, YNAP will adopt the Farfetch Platform Solutions to accelerate its growth and transition to a hybrid retail-marketplace business model. This move is seen as a major step towards the digitalization of the luxury industry, as stated by Richemont, Farfetch, and Alabbar. Richemont’s brands, including Cartier, Chloé, and Van Cleef & Arpels, among others, will establish e-concessions on the Farfetch Marketplace. This partnership not only expands the reach of Richemont’s brands through Farfetch’s platform but also strengthens Farfetch’s offerings in the watches and jewelry sector.
Farfetch believes that its platform is well-positioned to provide end-to-end capabilities for the luxury industry and is excited to collaborate on innovative technology solutions for luxury brands and retailers to meet the growing demands of luxury customers. By adopting Farfetch’s technology, YNAP can significantly enhance its marketplace offering and become more asset-light. YNAP will complement its curated inventory ownership with a third-party e-concession/marketplace offer, resulting in improved financial performance and an enhanced shopping experience for its customers.
The deal structure is quite complex, with YNAP having no controlling shareholder initially and no requirement for Farfetch to consolidate it. Upon completion of the sale, Richemont will receive Farfetch shares totaling 10%-11% of its fully diluted share capital and $250 million, which is expected to be settled in shares. YNAP will become debt-free and have around $300 million in cash on its balance sheet.
As for Alabbar, which is Richemont and YNAP’s partner in the Gulf States, it will become a minority shareholder in YNAP through exchanging its shares in the joint venture with YNAP in the Gulf Cooperation Council region. This means that YNAP will own 100% of its business in the region.
Following the announcement, Richemont’s investment in YNAP will be classified as an asset ‘held for sale’, and YNAP’s results will be presented as discontinued operations in Richemont’s financial statements.
The governance of YNAP will now be managed by a board of seven directors, with three representatives from each of Richemont and Farfetch, and one representative from Alabbar.
Johann Rupert, Chairman of Richemont, expressed his excitement about the deal, stating that it is a significant step towards realizing his long-standing vision of building an independent, neutral online platform for the luxury industry. He emphasized the importance of collaboration to protect the uniqueness of the luxury industry during its digital transformation. Farfetch’s technology will enable Richemont’s brands to benefit from the best route to market and implement their Luxury New Retail vision, while YNAP’s adoption of a hybrid model will greatly enhance its prospects.
