Richemont (CFRUY) announced on Monday that it will sell its online luxury clothing and accessories subsidiary, Yoox Net-A-Porter (YNAP), to Mytheresa (MYTE) for €555 million. Following the news, MYTE shares surged in trading on Monday.
Details of Richemont’s Sale of YNAP
According to the terms of the deal, Richemont will provide YNAP with a revolving credit facility worth €100 million to YNAP. A revolving credit facility allows a business to avail credit up to a set limit, as long as they make timely payments and don’t exceed the set limit.
Additionally, Mytheresa will issue shares to Richemont representing 33% of the company’s fully diluted share capital. Richemont expects to close this sale in the first half of next year.
Why Is Mytheresa Buying YNAP?
Mytheresa plans to integrate YNAP’s Luxury division to form one group with three distinct storefronts. These include Mytheresa, Net-a-Porter, and Mr Porter. By consolidating these platforms, the group aims to streamline operations and strengthen its position in the high-end fashion market.
At the same time, Mytheresa will also separate YNAP’s off-price luxury shopping businesses, which include Yoox and the Outnet, from its luxury business. This split will allow each business segment to focus on its core strengths.
Furthermore, YNAP will discontinue its white-label business segment. This comes as the Richemont Maisons’ online stores, which were previously powered by YNAP, will move to their own preferred platforms. A white-label business is where the company is not involved in the manufacturing of the product but buys it from another company and brands it as its own.
What Is the Target Price for MYTE Shares?
Only two analysts have covered MYTE stock over the past three months with a Hold consensus rating. Over the past year, MYTE has surged by more than 100%, and the average MYTE price target of $4.50 implies a downside potential of 33.4% from current levels.
