Billion-dollar deal in the German online fashion retailer: Zalando wants to completely take over its smaller competitor About You. The main shareholders around the Hamburg trading and logistics group Otto have already agreed to the sale of their shares, the Berlin company announced on Wednesday.
Europe’s largest online fashion retailer offers 6.50 euros per About You share. Based on the outstanding shares, the value of the company is 1.13 billion euros. The deal will be fully self-financed, Zalando emphasizes. The cash positions amount to 2.4 billion euros. The company expects that the acquisition will eventually generate an additional operating profit of 100 million euros per year.
In her announcement, she drew attention to the merger of the two corporate customer divisions “Scayle” and “Zeos”. An ecosystem is created that supports other companies and brands in conducting their online activities internationally. Analyst Volker Bosse of Baader Helvea Bank also emphasized that these areas complemented each other particularly well. He praised the transaction as a “bold consolidation step in the European online fashion retailer”.
Service provider for third parties
For About You, renting the shopping software “Scayle” to other companies is the growth engine and source of income. Zalando offers a similar program called “Tradebyte”. The Berlin company also makes its infrastructure in the “Zeos” business area available to third parties. According to the information, About You remains a brand in online fashion retail.
When asked how much the joint corporate customer activities would contribute to the expected profit increase, Zalando co-CEO Robert Gentz did not provide precise information during a conference call. “Both areas will have a significant share.” Full synergies are expected from around 2028. Gentz ruled out major job cuts. “There will be little or no change in our teams.”
Zalando reiterated its medium-term objectives
Zalando also reiterated its medium-term objectives. By 2028, both sales and gross volume of goods traded on the platform are expected to grow by five to ten percent annually. At this point, adjusted operating margin should be six to eight percent. In fiscal year 2023 it was 3.5 percent.
Nevertheless, Zalando shares fell by as much as 9.2 percent, just as sharply as last six months ago. “In the short term, Zalando’s profitability will suffer because About You is making a loss,” said analyst Bosse. The shares of the takeover target, on the other hand, recorded a record price increase of no less than 67 percent to 6.52 euros.
According to information, Zalando already owns almost three-quarters of the shares in About You. The main shareholders – Otto and the management of the online retailer – have agreed to the sale of their share packages. In addition, the company’s three founders Sebastian Betz, Tarek Müller and Hannes Wiese would retain their previous positions. Zalando commissioner Anders Holch Povlsen, who has an interest in About You, was not involved in the takeover decision to avoid conflicts of interest, Zalando co-founder Gentz emphasizes.
Otto brought About You to the stock exchange three and a half years ago, at an issue price of 23 euros. The group is best known for the mail order company of the same name, but Otto also owns parcel service Hermes, among others.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
