London-based web fashion firm Net-a-Porter agreed to merge with Italian online retailer Yoox Group, according to an announcement on Tuesday.
After both companies confirmed they were in talks on Monday, Net-a-Porter’s Swiss parent company Richemont said that it had entered an agreement with Yoox in an all-shares transaction that could create a combined company that is worth more than $2.5 billion. The deal is conditional on the agreement of Yoox shares at a June 2015 meeting and is expected to be completed by Sept. 2015. If it does go through, the new company will be called “Yoox Net-A-Porter Group” and be listed on the Borsa Italiana, where Yoox currently trades as a public company.
“Established business models are being increasingly disrupted by the technological giants,” Richemont Chairman Johann Rupert. “It is with this in mind that we believe it is important to increase leadership and size to protect the uniqueness of the luxury industry. The merger of the two leaders will further enhance an independent, neutral platform for a sophisticated clientele looking for luxury brands.”
The deal comes after rumors last week that Amazon.com was in talks to buy Net-a-Porter for $2 billion, though Amazon quickly dispelled those notions.
Following the completion of the deal, the company is expected to raise up to 200 million euros ($216 million) to fund growth. Richemont will own 50% of the combined company, though its voting rights would be limited to 25% based on agreements to preserve the company’s independence.
Founded in 2000 by Natalie Massenet, Net-a-Porter posted net sales for the 12 months ending on March 29, 2014 of about $835 million, up almost 23% from the previous year. Losses in that period were just over $20 million, down from the $31 million loss in the 12 months prior. For the 2014 calendar year, Yoox posted a consolidated net profit of about $14.8 million on net sales of $565 million.
Massenet will serve as executive chairman of the combined company while Federico Marchetti, founder and CEO of Yoox, will be CEO of the combined entity.
“Today, we open the doors to the world’s biggest luxury fashion store,” said Massenet in a statement. “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.”
This article was written by Ryan Mac from Forbes and was legally licensed through the NewsCred publisher network.