The deal provides a long-awaited, albeit painful exit for Richemont from a costly foray into multi-brand e-commerce. It also leaves YooxNet a-Porter without a controlling shareholder and paves the way for Farfetch to potentially acquire the remaining YNAP shares. As part of the agreement, Richemont’s brands will also adopt Farfetch'd technology to power their digital activities, leading to the creation of a complementary portfolio of iconic luxury destinations, appealing to different demographics, price points and regions.
This seems very good news for both companies. Richemont will bring its stake in YNAP below 50 per cent, allowing it to deconsolidate the e-tailer in its reporting, where the unit’s steep losses have dragged down the company’s valuation for years. The deal will also boost the operating profit margin by around 4.5 per cent.
As for Farfetch, the addition of Richemont’s brand portfolio to the platform is likely to give the e-tailer a much-needed traffic boost and exposure to a broader base of customers. The deal will also help its B2B Platform Solutions Unit, which provides white-label solutions for brands, in acquiring major clients . This is seen as an increasingly important growth engine for the group as some key luxury brands like Gucci reduce their exposure to third-party sellers.
Reference - https://www.businessoffashion.com/Farfetch-Acquires-Stake-in-YNAP
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