Italian fashion retailer Yoox in all-share merger deal with UK rival Net-A-Porter

Italian e-commerce fashion retailer Yoox Group SpA has agreed to merge its business with UK rival Net-A-Porter Group Ltd owned by Swiss holding company Richemont in an all-share transaction, aiming to create a leading global online luxury fashion retailer.

The combined entity, which will be called Yoox Net-A-Porter Group, will have 2014 revenue of approximately €1.3 billion ($1.4 billion). It is expected to attract more than two million high-spending customers and over 24 million monthly unique visitors worldwide.

Both the e-commerce firms were established in 2000, at the height of the dot com boom.

Bologna-based Yoox, founded by former investment banker Federico Marchetti is a multi-brand internet fashion retailer selling off-season luxury goods. It employs over 700 people and reported revenue of €524 million in 2014.

Net-A-Porter, headquartered in London, is a high-end fashion retailer launched by Natalie Massenent, and was bought by Richemont in 2010. The company sells clothing, jewelry, shoes and other accessories from top designers and also publishes Porter, a fashion magazine. It has around 2,600 employees and its annual revenue is estimated to be over €750 million.

Federico Marchetti said in a statement: ''This is a game-changing merger between two pioneering companies that have already radically transformed the marketplace since 2000 and will now shift the industry paradigm once again.''

''Together, we plan to expand on our many combined successes and industry breadth to strengthen partnerships with the world's leading luxury brands and harness a significant untapped growth potential,'' he further stated.

The companies believe that the merger would provide an expanded platform for building stronger partnership with global brands, increase its geographical footprint and better compete with online rivals and high-end department stores.

The merger is expected to close in September 2015, subject to regulatory and shareholder approvals.

The combination is expected to yield annual synergies of approximately €60 million by the third year after closing.

Richemont, the sole owner of Net-A-Porter, will get half of the combined group's share capital, but will have only 25 per cent of the voting rights to preserve the independence of the new entity. It will also have only two of the total of 12 director positions.

Yoox's Marchetti will become the CEO of the new group, while Natalie Massenet, founder and executive chairman of the UK retailer will serve as its executive chairman.

Upon closing of the deal, the group intends to raise €200 million through a rights issue to fund its future growth plans and the integration.

Yoox, which is currently listed on the Milan stock exchange, will be renamed Yoox Net-A-Porter group upon completion of the transaction.

According to some analysts, the merger could signal further consolidation in the luxury retail business. Richemont may be looking to sell some of its other non-core brands as well.

Goldman Sachs acted as financial advisor to Yoox on the deal while Richemont was advised by Lazard and Nomura.