European Commission Approves Farfetch Acquisition of YNAP, Wider Deal with Richemont
LONDON – The European Commission has “unconditionally” cleared the acquisition by Farfetch of a 47.5 percent stake in Yoox Net-a-Porter in a decision that had widely been expected.
The approval comes seven months after the U.K. Competition and Markets Authority approved the transaction, which was first announced in August 2022.
On Monday, Compagnie Financière Richemont said the EU was the last regulatory authority required to provide clearance. Richemont had planned to complete the deal later in the fourth quarter of this year.
In a brief statement, Richemont said the deal’s completion remains subject to “certain other conditions” that Richemont and Farfetch are working towards fulfilling. A further announcement will be made in due course.
The European Commission later issued its own statement, confirming its approval of “joint control of YNAP” by Richemont and Farfetch.
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It said the transaction “would not raise competition concerns, given its limited impact on competition in the markets where the companies are active.”
Richemont’s shares were down slightly in early afternoon trading at 104.15 Swiss francs.
As reported, YNAP’s parent company plans to sell a majority stake in Yoox Net-a-porter Group to Farfetch and Alabbar, YNAP’s partner in the Middle East.
On completion of the deal later this year, Richemont will hold a 49.3 percent stake in YNAP. Over the next five years, Farfetch is expected to acquire the entirety of YNAP, subject to certain conditions.
In exchange, Richemont will receive Farfetch Class A ordinary shares, expected to represent 12 to 13 percent of Farfetch’s issued share capital.
The deal also foresees the acquisition by Symphony Global, one of the investment vehicles of Mohamed Alabbar, of a 3.2 percent stake in YNAP, with the aim of transforming YNAP a “neutral online platform” for the luxury industry.
Richemont and Farfetch have said they plan to work together to accelerate the quality and global penetration of the Richemont brands online.
Going forward, Richemont will also leverage Farfetch technology, with YNAP and the Richemont maisons adopting Farfetch Platform Solutions. The maisons will also sell via e-concessions on the Farfetch Marketplace.
The wheels of the deal are already in motion: In the first six months of fiscal 2023, Richemont reported a loss of 766 million euros following the noncash write-down of assets linked to the proposed sale of a majority stake in YNAP.
Richemont chairman Johann Rupert has said the new alliance will realize his “long-standing goal of making YNAP a neutral, industry-wide platform, with no controlling shareholder.”
He added that “it was never Richemont’s dream, or intention, to own an online business.” Rupert said Richemont originally took full control of YNAP because its former shareholders had wanted to sell their stakes.
Rupert said the planned sale of YNAP to Farfetch will allow Richemont “to deliver on its global digital strategy” and, at the same time, “to focus on what it does best.”
He said the plan is to continue building brand equity at the company’s luxury maisons without having to worry about running a digital business.
The deal with Farfetch, he declared, will be “transformative for all of luxury, and not for a select few. It will transform big and small companies throughout Europe” by allowing them to set up shop online with help from tech-savvy Farfetch.
Founder and chief executive officer José Neves said Farfetch’s tech will be “a game-changer for Richemont’s brands, and allow them to operate in a hybrid marketplace that is open to the entire industry.” The deal, he added, will double the gross merchandise value of Farfetch.
This story was reported by WWD and originally appeared on WWD.com.
