(Bloomberg) — Richemont is reversing course on a solo effort to build a luxury e-commerce platform and is preparing to cede control of Yoox Net-A-Porter via a deal with web-shopping specialist Farfetch Ltd.
The move follows reports that activist investor Dan Loeb bought a stake in the Cartier owner, which has been struggling to turn its e-commerce business around since taking full control of it three years ago. Richemont shares rose as much as 9.1% Friday after the company also reported first-half earnings that beat estimates.
Farfetch, a London-based luxury e-commerce company, is in advanced talks to buy a minority stake in Yoox Net-a-Porter, Richemont said Friday. The goal is for the unit, known as YNAP, to be a neutral platform with no controlling shareholder. Other investors will be invited to join as well, the owner of Vacheron Constantin said.
Rivals have been reluctant to join YNAP given that the platform is controlled by one of the world’s largest luxury-goods makers. Chief Financial Officer Burkhart Grund said the company is in advanced talks with possible investors besides Farfetch, and Richemont Chairman Johann Rupert said the company is open to selling stakes to rivals.
Grund told reporters every shareholder would have less than 50% of YNAP’s voting rights.
Richemont already has bought a stake in Farfetch’s Chinese business. Last year when that deal was announced, Sanford C. Bernstein analyst Luca Solca said the alliance could be a precursor to Richemont spinning off YNAP and merging it with Farfetch or to selling it to Chinese e-commerce giant Alibaba Group Holding Ltd.
The Swiss luxury-goods maker also said it’s in talks for its brands to join Farfetch’s marketplace.
Separately, Rupert said Richemont has made a “clear statement” that it’s not for sale and not interested in mergers. Analysts have speculated the Swiss company would be a good partner for Gucci owner Kering SA.
Bank of America analysts had previously said that a potential partnership between Farfetch and Richemont would be a win-win situation, and that a consortium as the future ownership structure of the e-commerce unit would be the most likely outcome.
Richemont also said operating profit rose to 1.95 billion euros ($2.2 billion) in the six months through September. Analysts expected 1.49 billion euros.
“The post-Covid world is yet to emerge. For the second half of the year, volatility is likely to persist, including in terms of inflation and geopolitical tensions,” Rupert said in the statement. He also warned that the company will face a more difficult comparison base.
(Updates with shares in second paragraph)
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