The owner of Cartier said on Monday that the final regulatory permission was received for Farfetch’s (FTCH.N) purchase of a share in Yoox Net-A-Porter from Richemont (CFR.S) throughout Europe.
The completion of the transaction is still contingent on “certain other conditions that Richemont and Farfetch are working towards fulfilling,” Richemont stated, promising to provide an additional update “in due course” without going into further detail.
According to the August 2022 transaction terms, Richemont would trade more than 50 million Farfetch shares for a 47.5% ownership stake in the losing YNAP. Farfetch might purchase the remaining shares through a put-and-call option arrangement.
Financial issues at Farfetch, however, have made the transaction more difficult as U.S. retailers cut orders and more inventory comes from brands than from wholesale clients, restricting its capacity to entice customers with deals.
Due to costly technological and marketing expenditures, the U.S.-listed company has struggled to break even despite inventing an innovative business model that convinced many luxury companies to adopt online sales.
According to Bernstein analysts who stated last week that Richemont was concerned about Farfetch’s issues, Richemont intends to switch its online operation to Farfetch-managed technology and grant a $450 million credit facility.
In the last two years, Farfetch shares have lost almost 90% of their value, and the company’s market capitalization has fallen from $26 billion to just over $1 billion.
Following a bleak estimate for yearly sales caused by weaker-than-anticipated demand in the U.S. and Chinese markets, they fell by 40% in a single day in August.
Given that more than 500 Italian boutiques and department stores, Harrods, and Bergdorf Goodman use the site, Bernstein claims that Farfetch’s issues “could have ripple effects through an already suffering industry.”
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