Richemont, the Swiss luxury goods group, is reportedly reconsidering its deal to sell Yoox Net-a-porter (YNAP) due to uncertainties surrounding the future of online luxury retailer Farfetch. Although the sale of YNAP has gained regulatory approval from both the UK and the European Union, Richemont is now reviewing its options in light of Farfetch’s recent developments.
Farfetch’s shares spiked by 22.8% following reports that the company’s founder, José Neves, was working with J.P. Morgan to take the luxury platform private. Farfetch also canceled its third-quarter financial update, stating that it expects to provide a market update in the near future.
Richemont released a statement saying it is carefully monitoring the situation and reviewing its arrangements with Farfetch, which were announced in August 2022. The company clarified that its brands and YNAP have not yet adopted Farfetch Platform Solutions, which was part of the initial deal.
Sources familiar with Richemont suggest that there are various scenarios under which the arrangements with Farfetch might not be completed. Aside from the pending sale of YNAP, Richemont’s only other connection to Farfetch is a minority stake in a joint venture with Farfetch and Alibaba.
The deal between Richemont and Farfetch involves Farfetch acquiring a majority stake in YNAP, with Richemont retaining a 49.3% stake. Over the next five years, Farfetch is expected to acquire the entirety of YNAP. In exchange, Richemont will receive Farfetch Class A ordinary shares, which were trading at nearly $10 when the agreement was made. However, on Tuesday, these shares closed at $2.10, creating further complexity for Richemont.
The transaction also includes the acquisition of a 3.2% stake in YNAP by Symphony Global, one of Mohamed Alabbar’s investment vehicles. The aim is to transform YNAP into a neutral online platform for the luxury industry. The collaboration between Richemont and Farfetch was supposed to enhance the digital presence of Richemont brands and expand global penetration.
However, Richemont’s half-year fiscal report for 2023 already reflected a loss of 766 million euros linked to the sale of the majority stake in YNAP. Despite this setback, Richemont’s chairman, Johann Rupert, believes that the sale will enable the company to focus on its global digital strategy.
The uncertainty surrounding Farfetch’s future has consequently jeopardized the completion of Richemont’s deal to sell Yoox Net-a-porter. As both parties continue to review their options, the fate of this significant transaction remains uncertain.
