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Richemont, doubling down on online luxury, makes 2.8b-euro offer for Yoox Net-a-Porter

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Compagnie Financiere Richemont built a conglomerate offering the world's wealthiest consumers the highest-quality product, often in the most luxurious of settings.

[NEW YORK] Compagnie Financiere Richemont built a conglomerate offering the world's wealthiest consumers the highest-quality product, often in the most luxurious of settings. Clients walking into a Cartier flagship or a Piaget boutique - both Richemont brands - could expect radiant smiles and soft furnishings, as well as impeccable service for as long as was necessary before they made their purchase.

Increasingly, though, well-heeled clients don't want that type of service. Cash-rich, time-starved customers want their shopping to be quick, quiet and easy, done in a matter of seconds from their smartphone.

Richemont, which also owns upscale brands such as IWC, Montblanc and Van Cleef & Arpels, knows that times are changing. The Swiss luxury group announced on Monday that it was doubling down on its investments in high-end internet retail, making an offer of 2.8 billion euros (S$4.53 billion) for the online fashion retailer Yoox Net-a-Porter.

The surprise bid was a significant about-face in Richemont's strategy and an acknowledgment that wealthy consumers are increasingly comfortable buying an expensive watch or pen with a click rather than a trip to an upscale store. The process of buying luxury goods, which traditionally took place over many hours in lavish shops or department stores, is rapidly transforming.

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Personal luxury goods had been slower than other retail items to migrate online, but their online sales rose 24 per cent last year, according to a study by Bain & Co. The study also estimated that online sales of such products would account for 25 per cent of the market by 2025, compared with about 9 per cent now.

Richemont, which was already restructuring how it sold its watch and jewelry brands, clearly hopes to capitalize on that growth. It said it had offered to pay 38 euros a share to buy the Yoox Net-a-Porter stock that it did not already own, a 25.6 per cent premium to the company's closing price of 30.26 euros on Friday.

Yoox and Net-a-Porter merged in an all-share deal three years ago. At the time, Richemont was Net-a-Porter's controlling shareholder, and still holds about 25 percent of the combined company.

"With this new step, we intend to strengthen Richemont's presence and focus on the digital channel, which is becoming critically important in meeting luxury consumers' needs," Johann Rupert, the Richemont chairman, said in a news release.

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