Richemont to buy web venture

April 1, 2010
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, GENEVA, Apr 1 – Global luxury giant Richemont said on Thursday it was buying up a pioneering 10-year-old web-based women\’s fashion retailer, Net-a-Porter, founded by a former editor and valued at 350 million pounds.

The Swiss group already owns one third of the business, which was created by Frenchwoman Natalie Massenet and employs 600 staff in London and New York.

But its wholehearted venture into Internet fashion retailing would turn the website into one of the luxury goods company\’s hallmark "maisons," alongside standalone brands such as Cartier, Dunhill, IWC, Piaget and Van Cleef & Arpels.

Massenet would remain as chief executive and will invest in a Richemont unit being created to own the online business, the Swiss group said in a statement.

"Richemont announces that it has made an offer… to acquire all of the shares in Net-a-Porter," the Swiss company said in a statement.

"The offer values the equity of Net-a-Porter at 350 million pounds."

Richemont said that it had already received firm acceptances for its offer to buy outstanding shares in Net-a-Porter from owners of stock representing more than 80 percent of the voting rights.

The total valuation given by Richemont, equivalent to 395 million euros or 533 million dollars, amounts to about three times the website\’s annual sales last year of about 120 million pounds.

Net-a-Porter has adopted the lively style of a chic fashion magazine to sell collections from more than 300 well-known designers, selling to customers in more than 170 countries.

It offers some 300 brands including Jimmy Choo, Stella McCartney and Givenchy, delivering clothes and accessories from an 18 euro (24 dollars) triple pack of socks up to a 16,600-euro handbag with a few clicks of a mouse.

It defied the recession in the 12 months to January 2009 after notching up a 234 percent rise in pre-tax profits to 10.1 million pounds.

Massenet used to work for fashion publications Tatler and Women\’s Wear Daily. In November 2009 she was awarded an MBE honour by the Queen of England.

"Natalie has created a superb, customer-oriented business at Net-a-Porter in a relatively short period of time," Richemont chief executive Johann Rupert said.
Massenet commented that her team was proud of what they had built up in the 10 years since the business was founded.

"Richemont has completely embraced our vision and strategy since they came on board as a shareholder and together we are going to continue to build the 21st century model for luxury fashion retailing," she said.

Massenet reportedly held an estimated 18 percent stake in the website before the deal and stands to make a substantial profit, estimated in some news reports at 50 million pounds.

The luxury goods industry in general has traditionally been wary of online retailing.
But a Richemont executive also pointed to recent web sales ventures by Cartier in Japan and the United States.

"The \’maisons\’ in the Richemont Group are not afraid of the net," he said.

Alessandro Migliorini, an analyst at Helvea bank, described the acquisition as "a surprise," pointing to limited synergies with the rest of the group, although Richemont would gain expertise in Internet sales, he added.

Richemont\’s share price gained 1.9 percent by lunchtime (1155 GMT) trading on the Swiss exchange.

The Net-a-Porter transaction would be booked for Richemont\’s 2010-2011 financial year, which began on April 1.

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