Luxury good group Richemont announced Tuesday that it has entered into a "binding, conditional" deal to merge its high-end online retailer Net-A-Porter with Italian fashion site Yoox.
The combined firm, Richemont said in a statement issued early Tuesday morning, will launch a capital increase of up to 200 million euros upon completion of the deal. The Swiss luxury group behind the Cartier, Van Cleef & Arpels jewelry brands will hold a 50 percent stake in the new company, which will be called Yoox Net-A-Porter Group.
Richemont said that it is scheduled to make a 317 million euro one-off, non-cash, accounting gain from the tie-up, which is due to be completed by September.
"Richemont has been a pioneer in luxury e-commerce, first as a minority shareholder of Net-A-Porter in its infancy and then as a controlling shareholder since 2010. We are proud of Net-A-Porter's achievements under the leadership of Natalie Massenet, ably assisted by a wonderful team of professionals," chairman of Richemont, Johann Rupert said in a statement.
"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. The merger of the two leaders will further enhance an independent, neutral platform for a sophisticated clientele looking for luxury brands," he added.
The merger follows rumors last week that Amazon was in talks to buy the online luxury retailer.
Launched in 2000, Yoox is a multi-brand online fashion store with operations in China, Europe, the U.S. China and Hong Kong. It is listed on the Milan stock exchange, and posted 524 million euros ($567 million) in net revenues in 2014. Yoox shares surged over 11 percent in Milan after the details of the merger were released.
Founder of Yoox Group and new CEO of the combined group, Federico Marchetti, describing the deal as "game-changing".
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Richemont acquired a majority stake in London-based Net-a-Porter in 2010 for around £225 million ($332 million). The luxury group's representation will be limited to two directors on the new Yoox Net-A-Porter board, which will have a minimum of 12 members.
A Yoox-NAP tie-up is the just latest in a flurry of activity in the high-end online market. Earlier this month, Farfetch, which puts users in touch with luxury contemporary fashion boutiques around the world, was valued at $1 billion after it announced $86 million in funding.
Natalie Massenet, the former journalist who founded the Net-A-Porter Group, and who will serve as executive chairman of the newly merged firm said, "Today, we open the doors to the world's biggest luxury fashion store. It is a store that never closes, a store without geographical borders, a store that connects with, inspires, serves and offers millions of style-conscious global consumers access to the finest designer labels in fashion. A store that provides established and emerging brands with the greatest interactive shop window to the world."
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