by Silke Koltrowitz
ZURICH (Reuters) – Richemont said on Wednesday that Farfetch would acquire a 47.5% stake in online retailer YOOX Net-A-Porter (YNAP), and said the man Emirati businessman Mohamed Alabbar would take 3.2%.
Jewelry maker Cartier and watchmaker IWC also said it expected a writedown of 2.7 billion euros.
The Richemont title took 3.2% at 7:01 GMT on the Zurich Stock Exchange.
“The carrying value of this investment will be written down to the expected fair value less costs to sell, resulting in a non-cash charge to Richemont’s consolidated income statement, estimated at €2.7 billion,” did he declare.
The agreement between Richemont, Farfetch and Symphony Global, an investment vehicle of Mohamed Alabbar, also paved the way, through a put and call option mechanism, for the potential acquisition by Farfetch of the remaining shares of YNAP.
The deal comes amid massive investment in industry-wide digital services to reach customers, spurred by a faster shift to online consumption during the pandemic.
“This is great news for Richemont, finally. The deal ends years of underperformance and heavy investment in YNAP,” Vontobel analyst Jean-Philippe Bertschy wrote in a note, recommending the title to “purchase”.
The agreement will allow Richemont’s brands and YNAP to switch to Farfetch technology and strengthen the watch and jewelry offering on the American company’s retail site.
Richemont has invested heavily in YNAP, but its online distributors, which also include Watchfinder, still posted an operating loss of 210 million euros in the fiscal year ending March.
(Report Silke Koltrowitz; French version Alizée Degorce, edited by Kate Entringer)
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