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Richemont to Acquire YNAP to Boost Online Presence

photo credit: Net-A-Porter

Richemont is seeking to correct a misstep—one that likely put it behind other luxury firms.

The firm on Monday announced its intention to acquire the Yoox Net-A-Porter Group for 2.8 billion euro ($3.4 billion).

The Richemont portfolio, which once included Net-A-Porter before the company orchestrated the merger with Yoox, spans jewelry, watches and writing instruments under high-end labels like Cartier, Van Cleef & Arpels and Montblanc. Richemont landed in the No. 2 spot on Deloitte’s Global Power of Luxury Goods list for 2017, just behind powerhouse LVMH.

Richemont owns 24.97% of YNAP shares and has offered 38 euro ($46.50) per share for the balance, a 25.6% premium over the stock’s closing price on Friday.

“With this new step, we intend to strengthen Richemont’s presence and focus on the digital channel, which is becoming critically important in meeting luxury consumers’ needs,” Richemont chairman Johann Rupert said in a statement.

Richemont’s focus would be on growing the business in new geographic regions, increasing the breadth of its assortment and delving deeper into content, Rupert said.

Yoox Net-A-Porter Group, which reported a 16.9% surge in net revenues in 2017 to 2.1 billion euro ($2.6 billion), would continue to operate as a separate business.

YNAP CEO Frederico Marchetti is optimistic about what the acquisition could mean for the company. “Nearly 20 years after inventing YOOX, YNAP’s magic excites me even more. The prospect of no longer owning 4% of the share capital does not change my entrepreneurial commitment to YNAP. Dreaming and innovating to the benefit of our customers has always been my motivation; it will remain so in the years to come,” he said in a separate statement.

Richemont’s about-face shows that luxury is finally catching up with consumers’ willingness to shop online—even for pricey goods. Until recently, the sector had struggled with how to maintain the elevated allure of its products and the mystique behind its storytelling on the web. Net-A-Porter is notable for being one of the first sites to gain the trust of this elite group, while Yoox is the engine powering online shops for brands like Chloé and Stella McCartney.

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In response to consumer trends, YNAP launched a new tech hub in July, designed to develop the capabilities needed to increase mobile sales from 50 percent to 75 percent by 2020.

Richemont no doubt also took note of steps taken by its competitors. In May, chief rival LVMH launched, a multi-brand digital outpost offering a wide range of luxury goods, including its own as well as others.

The deal comes at a time when industry watchers have said acquisition activity will rev up as traditional companies look to quickly on board expertise it would take them too long to develop in house.

“Given the lack of interesting acquisition targets up for sale in their core business of hard luxury, Richemont has decided to put at work its big cash pile investing into distribution channels,” Bernstein analyst Mario Ortelli told The Wall Street Journal.