French luxury conglomerate Richemont is exiting Yoox Net-a-Porter, shedding the loss-making online luxury business and selling a 50.7 percent stake in the online retailer to Farfetch and an investment vehicle owned by Qatari businessman Mohamed Alabbar, losing $2.68 billion in the process.

WHO: Yoox Net-a-Porter (YNAP) is an Italian online fashion retailer created in October 2015 after the merger between Yoox Group and Net-a-Porter Group. Yoox was originally founded by Federico Marchetti in Milan in 2000, and Natalie Massenet founded Net-a-Porter in London in 2000.

WHY: The deal paves the way for Farfetch to dominate luxury e-commerce, powering the YNAP and Richemont brands with its digital platform and broadening its customer base.

IN THEIR OWN WORDS: In a statement, Farfetch CEO José Neves said, "This investment and work we will do with Farfetch Platform Solutions for YNAP will pave the way to a potential acquisition by Farfetch, which would create a complementary portfolio of iconic luxury destinations, appealing to different demographics, price points and regions."

DETAILS:

• Richemont has sold its controlling 50.7% stake in Yoox Net-a-Porter to Farfetch (47.5%) and to investor Mohamed Alabbar, developer of the Dubai Mall's Symphony Global (3.2%). 
• In return for the stake in YNAP, Richemont will receive 12-13% of Farfetch's issued share capital, implying a value for the whole of YNAP of about $1 billion far below the roughly $5 billion valuation Yoox Net-a-Porter had in early 2018 when Richemont agreed to take full control of the business. 
• The deal leaves Richemont with a minority stake in YNAP and provides Farfetch the ability to acquire the remaining shares.
• The business will no longer be on Richemont's balance sheet. The losses have depressed its earnings and valuation. In the fiscal year to March 31, 2022, Richemont's online distributors, led by YNAP, lost 210 million euros ($208.4 million).