Richemont Could Review YNAP Deal With Farfetch Amid Delisting Reports -- Update

By Andrea Figueras and Joshua Kirby

Luxury group Richemont said it has no plans to invest further in Farfetch and could reconsider a deal with the e-commerce firm, amid speculation Farfetch may be taken private by backers that include China's Alibaba.

"Richemont would like to remind its shareholders that it has no financial obligations towards Farfetch and notes that it does not envisage lending or investing into [it,]" the Cartier-owner said Wednesday.

Richemont said it could review its deal with British-Portuguese Farfetch, reached last year, under which Richemont agreed to divest nearly half of its e-commerce business Yoox Net-A-Porter in return for a minority stake in NYSE-listed Farfetch, and access to the latter's platforms. The deal has not yet closed, a spokesperson for the company said.

"Neither Richemont Maisons nor YNAP have currently adopted Farfetch Platform Solutions and they continue to operate on their own platforms," Richemont said.

A spokeswoman for Farfetch declined to comment.

Richemont's comments come after Farfetch said late Tuesday that it won't publish third-quarter results, which had been due Wednesday. The company also won't provide forecasts at this time, and any prior guidance should no longer be relied upon, Farfetch said.

On Tuesday, British daily the Telegraph reported that Farfetch founder Jose Neves was in talks with top shareholders to take the company private, sending Farfetch shares surging more than 20%. According to the newspaper, the move could have the support of major backers including e-commerce giant Alibaba, as well as Richemont. Alibaba didn't immediately respond to a request for comment.

A delisting of Farfetch could affect the YNAP deal with Richemont, analyst Piral Dadhania at RBC Capital Markets said. Potential outcomes include Farfetch backing out of the deal or renegotiating its terms, Dadhania wrote in a research note. The deal could, however, also continue in its current form, he added.

In the latter case, Richemont would be entrusting its brands' platform technology to a privately-owned firm, Dadhania said. This would be unusual and imply some operational risk, he said.

In a worst-case scenario in which the deal fell apart, Richemont would likely look for other options to deconsolidate YNAP, Dadhania said. Richemont had struggled to make the business profitable, and it had weighed on the wider group before last August's deal, which was widely welcomed by sector analysts and by investors.

Write to Andrea Figueras at [e-mail] and to Joshua Kirby at [e-mail]; @joshualeokirby

(END) Dow Jones Newswires

November 29, 2023 05:19 ET (10:19 GMT)

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