Less than a week after Amazon was reported to be working on a $2.2 billion deal to buy luxury eCommerce retailer Net-a-Porter, Italian online fashion retailer YOOX announced it will merge with Net-a-Porter instead, the companies said on Tuesday (March 31).
Under the deal, YOOX will give Net-a-Porter’s Swiss owner Richemont about $770 million worth of stock, and Richemont will own 50 percent of the combined company, which will be called YOOX Net-a-Porter Group and have combined sales of €1.3 billion ($1.4 billion), with more than 24 million monthly unique visitors, including 2 million high-spending customers.
However, Richemont’s voting rights will be limited to 25 percent, putting YOOX in effective control of the combined company. YOOX founder and CEO Federico Marchetti will be CEO of the new company, while Net-a-Porter founder and executive chairman Natalie Massenet will serve as executive chairman.
The deal, which is expected to close in September 2015, will create the world’s biggest online luxury-goods retailer, Bloomberg reported.
Once the deal has closed, YOOX Net-a-Porter Group plans to sell additional shares worth up to €200 million ($215.53 million) to raise funds for expansion and allow for the entry of “strategic investors.” Richemont said it would buy additional shares in the combined company at that time.
According to the companies, 28 percent of the combined net revenues come from North America, with 15 percent from the U.K., 7 percent from Italy, 30 percent from the rest of Europe, 15 percent from the Asia-Pacific region and 5 percent from the rest of the world, with customers from more than 180 countries worldwide.
Richemont was in talks to sell Net-a-Porter to YOOX in the past, but they stalled in 2013. Richemont has also explored options including an IPO for Net-a-Porter, according to Bloomberg.
The successful YOOX-Richemont deal is a blow to Amazon, which was reportedly trying to improve its status with luxury brands by acquiring Net-a-Porter. Amazon bought Shopbop in 2006 and flash-sales site MyHabit in 2011, both of which carry some luxury brands. But for the most part, high-fashion brands have refused to officially sell their goods on Amazon’s own branded sites.