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Mergers & Acquisitions

Yoox to Merge With Net-a-Porter in All-Share Deal

Natalie Massenet, the founder of Net-a-Porter, at the company's offices in London in 2013.Credit...Jonathan Player for The New York Times

LONDON — The Yoox Group said on Tuesday that it had agreed to merge with its luxury e-commerce rival Net-a-Porter in an all-share deal.

The transaction would create an online luxury fashion retailer from two companies that combined to post revenue of 1.3 billion euros, or about $1.4 billion, in 2014, Yoox said. The new company would be called Yoox Net-a-Porter Group.

The agreement comes more than a year after the first reports that Yoox was exploring a purchase and a day after the companies confirmed they were considering a potential “business combination.” It also followed speculation last week that Amazon was interested in acquiring Net-a-Porter.

“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,” Federico Marchetti, the founder and chief executive of Yoox, said in a news release. “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.”

Net-a-Porter’s website sells clothing, jewelry, shoes and other accessories from top designers and labels, including Alexander McQueen, Dolce & Gabbana and Valentino. It also publishes Porter, a magazine that lets readers buy featured items.

Yoox sells off-season luxury goods in its online store, as well as trendier brands on thecorner.com.

In an interview by telephone from Milan, Mr. Marchetti said that he valued Net-a-Porter’s editorial skills. “Editorial content has never been our strength or priority at Yoox,” he said. “But it is very important for social media, which is driving millennial sales in the e-commerce space. Smartphones now make up 50 percent of the traffic on Yoox’s websites.”

Those editorial skills, he said, would also bolster Yoox’s business building and operating websites for luxury brands, including those of rivals to Compagnie Financière Richemont, the Swiss parent company of Net-a-Porter. Yoox already powers sites for more than 30 brands, including Armani, Zegna, Lanvin and Valentino, and has a joint venture with Kering to power the websites for many of its luxury brands including Bottega Veneta, YSL and Alexander McQueen.

Mr. Marchetti would serve as the chief executive of the combined company, and Natalie Massenet, the founder of Net-a-Porter, would be its executive chairwoman.

“Today, we open the doors to the world’s biggest luxury fashion store,” Ms. Massenet said. “It is a store that never closes, a store without geographical borders, a store that connects with, inspires, serves and offers millions of style-conscious global consumers access to the finest designer labels in fashion.”

Under the deal, Richemont would receive 50 percent of the combined company’s shares and hold 25 percent of its voting rights. It would also be limited to two of the company’s 12 independent directors. Richemont acquired a majority interest in Net-a-Porter in 2010 in a deal that valued the e-commerce company at 350 million pounds, or about $519 million.

Both websites would remain separate, Mr. Marchetti said, and Net-a-Porter’s headquarters would remain in London. The companies expect annual cost savings of about €60 million by 2018, which would be the third year of the completed merger, primarily from combining logistics and technology operations. Plans are, he said, to enlarge warehouses in Bologna, Italy, and in London, and to combine logistics operations in the United States, which is the biggest market for both companies, accounting for 28 percent of combined sales.

Analysts said the merger might herald further consolidation in the luxury retail sector.

“I would expect this could prompt more consolidation of pure play retailers,” said Luca Solca, the BNP Exane Paribas analyst, referring to e-commerce businesses without freestanding stores. “After a honeymoon with the market, investors are seeing that making money as a pure play is not easy. Hence this could prompt more companies to improve their chances through higher scale.”

In a note to clients, the Citibank luxury equity analyst Thomas Chauvet wrote that he expected the deal was “logical” for Richemont and could renew speculation that Richemont was looking at disposing of other noncore fashion brands like Dunhill, Lancel and Chloé.

The transaction is subject to regulatory and shareholder approval and is set to close in September. Yoox would remain listed in Milan and based in Italy.

If the transaction is completed, the combined company will seek to raise up to €200 million in capital to fund future growth opportunities.

Yoox was advised by Goldman Sachs and the law firms d’Urso Gatti e Bianchi, and Skadden, Arps, Slate, Meagher & Flom. Richemont was advised by Lazard and Nomura, and the law firms Slaughter and May and Bonelli Erede Pappalardo.

Chad Bray reported from London, and Vanessa Friedman from New York.

A version of this article appears in print on  , Section B, Page 5 of the New York edition with the headline: Online Fashion Merger. Order Reprints | Today’s Paper | Subscribe

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