In a groundbreaking move, luxury Swiss company Richemont has announced that it will be selling a 47.5% stake in Yoox Net-A-Porter (YNAP) to Farfetch, with Emaar’s Mohamed Alabbar acquiring a 3.2% stake. This deal will result in YNAP becoming a neutral platform with no controlling shareholder, although Farfetch will have the option to acquire the remaining stake in the future.

The implications of this deal are significant for YNAP and Richemont’s own brands. YNAP will adopt Farfetch Platform Solutions to drive growth and transition towards a hybrid retail-marketplace business model. Richemont’s prestigious brands, including Cartier, Chloé, and Montblanc, will open e-concessions on the Farfetch Marketplace. This high-profile transaction is seen as a major step towards the digitalization of the luxury industry.

Richemont’s goal to create a neutral platform for the luxury industry aligns with Farfetch’s capabilities to provide end-to-end solutions for luxury brands and retailers. By adopting Farfetch’s technology, YNAP will be able to accelerate the rollout of its marketplace offering. The move towards a hybrid business model will combine first-party curated inventory ownership with a third-party e-concession/marketplace offer, improving YNAP’s financial performance and enhancing the shopping experience for customers.

The complexity of the deal lies in the intertwined nature of the companies’ businesses. After selling 47.5% of YNAP’s share capital to Farfetch, Richemont will receive Farfetch shares equivalent to 10%-11% of the fully diluted share capital. Richemont will also receive $250 million, which is expected to be settled in shares. With this deal, YNAP will become debt-free and will have approximately $300 million in cash. Additionally, Richemont has made a committed credit facility of $450 million available to YNAP for up to 10 years, subject to certain conditions.

As part of the deal, Alabbar, Richemont, and YNAP’s long-term partner in the Gulf States will become minority shareholders in YNAP. In exchange for their shares in the joint venture with YNAP in the Gulf Cooperation Council region, YNAP will own 100% of its business in that 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 consolidated interim financial statements.

The governance of YNAP will now be overseen by a board of seven directors, with three representatives each from Richemont and Farfetch, and one representative from Alabbar.

Johann Rupert, Chairman of Richemont, expressed his enthusiasm for this deal, emphasizing that it is a significant step towards the realization of his vision of creating an independent and neutral online platform for the luxury industry. He acknowledged the importance of collaboration in preserving the uniqueness of the luxury industry during its digitalization process.

With the advanced technology of Farfetch and the support of Richemont, the luxury brands associated with Richemont will have the best route to market while implementing a hybrid model at YNAP, greatly enhancing its prospects.

Useful links:
Article on Financial Times
Article on Vogue Business