Yoox Net-a-Porter, an e-commerce group that calls itself the “world’s biggest luxury fashion store,” is setting its sights on the Middle East, selling a 100 million-euro stake to Alabbar Enterprises, the Dubai, United Arab Emirates-based owner of Emaar Properties, which includes the Dubai Mall, the world’s most-visited luxury shopping mall.
“The world’s biggest online retailer is joining forces with the world’s biggest brick-and-mortar retailer,” Federico Marchetti, chief executive of Yoox Net-a-Porter, said in a call from Milan.
In a deal announced on Tuesday in Milan, Alabbar, which is controlled by Mohamed Alabbar, will pay €28 a share, a premium of 5.7 percent on the closing share price of Yoox Net-a-Porter on Monday. The deal values the company at €3.7 billion, or about $4.2 billion. Richemont, the former parent of Net-a-Porter, will remain the group’s largest shareholder; Alabbar will have 4 percent of ordinary shares.
It is the biggest move Mr. Marchetti has made since Yoox merged with Net-a-Porter in March 2015. Natalie Massenet, the founder of Net-a-Porter, who was expected to be executive chairwoman, resigned from the group a few months later.
Shares in they company rose as much as 7.4 percent Tuesday morning in Milan, before paring their gains and closing at €27.80, a 5 percent increase.
Yoox Net-a-Porter “is a business that promises continuing gross revenues, as more and more brands convert to digital,” said Luca Solca, an analyst for Exane BNP Paribas. “It is understandable why a long-term investor may be attracted to it.”
The investment reflects Mr. Marchetti’s ambitions for Yoox Net-a-Porter, which also includes the e-commerce sites Mr Porter and The Outnet, and which manages and powers the websites of brands like Giorgio Armani and Lanvin.
It is also a vote of confidence in the future of Yoox Net-a-Porter without Ms. Massenet, who was widely seen as having the trust of the luxury world, and with Mr. Marchetti, who founded Yoox as an off-season sale site, cast in the role of corporate manager.
In December, it was revealed that Carmen Busquets, one of the original shareholders of Net-a-Porter, had questioned the decision by Richemont to approve the merger as well as the valuation of the business.
Since that time, however, Moncler, Brunello Cucinelli and others have joined the stable of elite fashion brands sold on Net-a-Porter.
Mr. Marchetti said the money would be used to develop an integrated platform across the group’s brands, as well as to fund increased localization of websites, especially in Middle Eastern countries.
Though they deliver to over 180 countries, neither Yoox nor Net-a-Porter has a website in Arabic, despite the fact that the Middle East represents 5 percent of the luxury market. The company said the region was a “marginal” contributor to net revenue, which reached €1.7 billion over all in 2015.
Despite a report from the consulting firm Bain that said sales of luxury goods in the Middle East flattened in 2015, in part because of reduced Russian tourism and unstable oil prices, Mr. Marchetti said: “We are not seeing any deceleration in demand. We have big plans for the region.”
The region also, it seems, has big plans for luxury. In 2012, for example, Investcorp, based in Bahrain, bought the Danish silver brand Georg Jensen for $140 million. The next year, Mayhoola for Investments, based in Qatar, bought the Valentino fashion brand for $850 million; it also has a stake in the British leather goods brand Anya Hindmarch and a majority stake in the Italian men’s wear brand Pal Zileri.
The Qatar Investment Authority has a stake in the luxury behemoth LVMH Moët Hennessy Louis Vuitton, as well as Tiffany & Company, and in 2013 formed a joint venture with the Italian state investment fund called IQ Made in Italy, in which they pledged to invest up to €1 billion in Italian luxury goods and lifestyle companies.
Bank of America Merrill Lynch was the adviser for the deal.
Written By VANESSA FRIEDMAN
Source: New York Times
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