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Cape Town - Luxury brands group Richemont has pitched an offer to buy out high end fashion house Net-a-Porter.
According to an announcement on Thursday, the Richemont offer has the backing of shareholders speaking for 80% of the voting rights in Net-a-Porter.
The deal is somewhat surprising, with Richemont looking more inclined to consolidating its operations in the global downturn that followed the financial crisis of 2008. Richemont, though, is flush with cash balances topping €900m as at the end of September 2009.
Richemont, better known for its jewellery and watch brands, already owns a 33% stake in Net-a-Porter.
The buyout offer values Net-a-Porter - which operates mainly from London and New York - at £350m (R3.6bn), which means Richemont will be forking out about £235m (R2.6bn) to buy out the shares it does not already own.
Richemont indicated that the offer had the full support of Net-a-Porter senior management with company founder Natalie Massenet remaining as executive chairperson and making an investment in the Richemont subsidiary that will house the business.
Net-a-Porter, which generated turnover of £120m (over R1.3bn) for the year to end-January 2010, will operate as an independent entity alongside Richemont's other luxury goods businesses.
Richemont chairperson and CEO Johann Rupert said Net-a-Porter was a "superb, customer-oriented business".
He said Richemont valued the independence of its Maisons very highly. "That principle will especially apply to Net-a-Porter as a platform for third parties."
He said Richemont would provide Net-a-Porter with the support it required to realise its business strategies.
Richemont's fashion and accessories businesses (which include Alfred Dunhill and Chloe) generated sales of €264m in the half-year to end September 2009. However, these interests operated at loss for the interim period.
- Fiin24.com
*The writer owns shares in Richemont.
