CFRUY Compagnie Financiere Richemont (PK)

By Joshua Kirby

Swiss luxury-goods group Compagnie Financiere Richemont SA said Wednesday that it has agreed to sell a majority stake in Yoox-Net-A-Porter to Farfetch Inc. and Dubai-based investor Mohamed Alabbar, securing a deal--first flagged at the end of last year--that could see Farfetch assume full ownership of YNAP in the future.

British-Portuguese e-commerce platform Farfetch will acquire an initial 47.5% stake in peer YNAP in return for 53 million-58.5 million of its own shares, or around 12%-13% of its issued share capital, Richemont said.

Richemont, owner of jewelers Cartier and Van Cleef & Arpels, said it will receive a further $250 million on the fifth anniversary of the completion of the initial transaction, also payable in shares in New York-listed Farfetch. Based on Farfetch's latest closing price of $7.84, this gives YNAP an implied equity value of $1.5 billion.

Symphony Global, an investment vehicle controlled by real-estate mogul Mr. Alabbar, will acquire a 3.2% stake in return for the shares it owns in a joint venture with YNAP in the Gulf Cooperation Council region, Richemont said. This will give YNAP full ownership of its business in the region, the company said.

Richemont will book a 2.7 billion euro ($2.69 billion) noncash writedown from the divestment, it said, adding that YNAP will be booked as discontinued operations for the fiscal first half ending Sept. 30 and until the closing of the initial transaction.

Under the terms of the deal, YNAP will be debt-free at the time of closing, with a balance sheet holding at least $290 million in cash. Richemont will also make available a loan facility of $450 million that YNAP can draw upon at its discretion, it said.

Under the deal, which is subject to conditions including antitrust approvals and is expected to be completed by the end of next year, Farfetch has an option to acquire all remaining shares in YNAP between three to five years from that point, at fair market value, Richemont said.

The call option is subject to YNAP achieving positive adjusted earnings before interest, taxes, depreciation and amortization in the previous 12-month period and in three of four quarters within that period, Richemont said.

Richemont and YNAP will also use Farfetch's technology platform as a sales channel under the deal, Richemont said, with most of the group's brands to launch e-concessions on Farfetch's marketplace.

The deal comes nine months after Richemont first said it was in talks with Farfetch over divesting control of YNAP, which it has struggled to make profitable. The group said at the time that it wanted YNAP to become a neutral platform for the industry, with no overall controlling shareholder.

Following the transaction, YNAP will be governed by three directors each from Richemont and Farfetch and one representative of Mr. Alabbar, the company said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

August 24, 2022 02:45 ET (06:45 GMT)

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