Richemont, which owns Net-a-Porter, has announced it will be entering into a binding, conditional agreement with Yoox. Once all shareholders approve of the deal, the combined group will be listed on the Italian stock exchange in September.
Johann Rupert, chairman of Richemont, said: “Established business models are being increasingly disrupted by the technological giants. It is with this in mind that we believe it is important to increase leadership and size to protect the uniqueness of the luxury industry.
Five years ago Net-a-Porter founder Natalie Massenet collected 50m when she sold her stake in Richemont, valuing her company at 350m. She is now in line to double that payout in the Yoox deal.
Massenet will be handed a four per cent stake, worth 64m, in the new company. This will value the company equal to Yoox, which stands at 1.6bn.
However, although Net-a-Porter’s parent company will get 50 per cent of the shares, its voting rights will be capped at 25 per cent. This means that Yoox founder Federico Marchetti will become CEO while Massenet will become executive chairwoman.
Together with her fashion credentials and Yoox founder Federico Marchetti’s experience as an investment banker, Qing Wang, professor of marketing and innovation at Warwick Business School, is convinced that the merger will create an online global fashion giant .
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He said: The 3.4bn merger of Net-a-Porter with Yoox is yet another success story of creativity, innovation and entrepreneurship in the British luxury and fashion industry.
They will have the combined sales of 1.3bn. This news helps to expel the myth that digital and luxury are like oil and water they dont mix well. Quite the contrary, and I have to agree with the Vogue editor, Suzy Menkes, who succinctly pointed out luxury today is as much about high-tech as high heels.
Both companies were founded in 2000 but take different approaches to designer fashion. And according to Bernstein Research analyst Mario Ortelli, the merger, which brings together the mixed experiences of their leaders, comes at a good time given the rise in online luxury brand competition.
This is something that Marchetti agreed with. He said: Together, we plan to expand on our many combined successes and industry breadth to strengthen partnerships with the worlds leading luxury brands and harness a significant untapped growth potential.
Wang explained that with the current pace of the online luxury retailing sector, it is no longer a question of should luxury brands use technology, but how and when”.
“Luxury brands who have embraced this trend have fared better than brands who havent, just look at how Burberry has become a market leader by making such a digital overhaul,” Wang added.
A bonus for the British luxury industry is the fact it may well have an edge with its competence in blending heritage with innovation.”