Richemont to Cede Control of Yoox Net-A-Porter Via Farfetch Deal

(Bloomberg) -- Richemont is reversing course on a solo effort to build a luxury e-commerce platform and is preparing to cede control of Yoox Net-A-Porter via a deal with web-shopping specialist Farfetch Ltd.  

The move follows reports that activist investor Dan Loeb bought a stake in the Cartier owner, which has been struggling to turn its online business around since taking full control of it three years ago. Richemont shares rose as much as 9.8% Friday after the company also reported first-half earnings that beat estimates.

Farfetch, a London-based luxury e-commerce company, is in advanced talks to buy a minority stake in Yoox Net-a-Porter, Richemont said Friday. The goal is for the unit, known as YNAP, to be a neutral platform with no controlling shareholder. Other luxury-goods makers will be invited to join as well, the owner of Vacheron Constantin said. 

While Chairman Johann Rupert is defusing a potential standoff with Loeb over YNAP, Richemont’s founder said the move isn’t a response to activist pressure. 

“We’ve been signaling this for a year now,” Rupert said. “It’s not activist pressure or anything at all.”

Some brands have been reluctant to join YNAP given that the platform is controlled by a competitor. Chief Financial Officer Burkhart Grund said the company is in advanced talks with possible investors besides Farfetch, and Rupert said the company is open to selling stakes to luxury-good rivals. Those talks will take place in the coming months, he said.

Grund told reporters every shareholder would have less than 50% of YNAP’s voting rights. YNAP also plans to use Farfetch’s technology, and Richemont would put its brands on the rival’s platform.

No Sale

Separately, Rupert said Richemont has made a “clear statement” that it’s not for sale and not interested in mergers. Analysts have speculated the Swiss company would be a good partner for Gucci owner Kering SA.

Richemont already has bought a stake in Farfetch’s Chinese business, and a joint venture between the companies and e-commerce giant Alibaba Group Holding Ltd. began operating in August. Last year when that deal was announced, Sanford C. Bernstein analyst Luca Solca said the alliance could be a precursor to Richemont spinning off YNAP and merging it with Farfetch or to selling it to Alibaba.

Richemont also said operating profit rose to 1.95 billion euros ($2.2 billion) in the six months through September. Analysts expected 1.49 billion euros.

“The post-Covid world is yet to emerge. For the second half of the year, volatility is likely to persist, including in terms of inflation and geopolitical tensions,” Rupert said in the statement. He also warned that the company will face a more difficult comparison base.

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