The CMA, the UK competition authority, announced on Tuesday that is looking for comments on the sale of Richemont’s stake in the electronic commerce platform Yoox Net-a-Porter (YNAP) to the Portuguese-British Farfetch. The deal in the luxury retail sector was announced in August last year.
At the time, through a joint statement, it was explained that the participation of the Swiss Richemont, owner of brands such as Cartier and Montblanc, in the group that controls the Net-a-Porter website, will pass into the hands of Farfetch. That is, when the deal is complete, Farfetch will own 47.5% of the group, which has a global luxury customer base of four million people. In exchange, Richemont receives between 53 and 58.5 million class A shares of José Neves’ company, “which are expected to represent between 10 and 11% of the diluted capital of the company’s shares and between 12 and 13% of the issued capital”, he explained in August.
Farfetch acquires 47.5% of the e-commerce company Yoox Net-A-Porter. Richemont increases its position in Farfetch
This Tuesday, a note from the CMA explains that this authority is considering whether, once the transaction is completed, a scenario can be created in which there is “a substantial reduction of competition” in the UK goods and services market.
In that sense, the CMA is requesting comments on the transaction from anyone considered to be an interested party in this luxury goods market.
At this time, the English authority indicates that it will be possible to send comments about it until February 14. Only based on these comments will the CMA issue considerations and, from there, will understand whether or not it is necessary to initiate an investigation.
The finalization of an agreement on the acquisition of Richemont’s stake in YNAP opened the door to the possibility that Farfetch could buy all of YNAP. An option was included in the deal so that the Portuguese-British company could later buy the remaining shares of YNAP, although there is a set of conditions attached, which is described as “a possible second and final phase of the transaction.” In that phase, Farfetch has the option to buy all the YNAP shares “that it does not have at the time of the exercise, something that can be activated at any time from the conclusion of the initial phase of the transaction until the fifth anniversary (…)”, can be read in the joint statement.
Even before last summer’s announcement, Richemont already had a link to Farfetch. In November 2020, the company announced a partnership with China’s Alibaba to invest $1.1 billion in Farfetch. As of this partnership, the companies had a combined 25% stake in the operation of the luxury fashion platform in China.
Source: Observadora
