After The Biggest Luxury Electric Business Merger, Internal Struggle Continues.

For the vast majority of fashion insiders, this seems to be a successful business.

This spring, the two largest industries

The Yoox from Italy and Net-a-Porter, based in London, announced the merger. Yoox bought the Net-a-Porter business at a market price of $1 billion 400 million, and the new company established after the merger will become the leading luxury business platform in the industry.

"I think there is no more perfect paction in the history of the industry than the M & A," Yoox chief executive Federico Marchetti Federico told the financial times in May.

Behind the scenes, however, there is a series of internal games between the major shareholder of Net-a-Porter and its original shareholders.

According to insiders, Net-a-Porter management and some minority shareholders opposed the merger plan. They believed that the price of Net-a-Porter, the major shareholder of Richemont, the Swiss luxury empire's Richemont, was much lower than the valuation.

Carmen Busquets, one of Net-a-Porter's first investors, even wanted to unite a group of investors to repurchase the controlling stake of Net-a-Porter at a price higher than that provided by Yoox. (Carmen Busquets)

In a large number of letters from Busquets and founder of Net-a-Porter and the executive chairman of today's joint venture, they complain bitterly that this leading high-end luxury item.

Sold at an ultra-low price.

"In just two weeks, I have ensured that the company's capital stock is enough to buy the entire Net-a-Porter platform at a minimum price of 1 billion 400 million pounds.

At the same time, there is no doubt that the company's future partners are far more potential than Yoox, "Busquets wrote in a letter to the board of directors of the June 12th group." I believe your shareholders would also like to know why management chose to sell Net-a-Porter to Yoox for 400 million pounds or even 500 million pounds.

The internal dispute did not have a substantial impact on M & A, which was finally completed in October.

But it also exposed the conflict between Net-a-Porter shareholding Busquets and the peak group.

{page_break}

The focus of the debate is on the way in which high-end fashion products will be sold in the future.

Last year, sales in the industry reached $243 billion.

The industry generally believes that luxury consumers prefer privatization shopping experience, so the luxury fashion industry's desire to move to the Internet is not strong.

However, top brands have begun to notice the growing number of consumers on the Internet platform.

In 2010 this year, luxury online sales accounted for 6% of total sales, analysts in Paris bank and ContactLab said in a report this spring.

Analysts also predict that by 2020, sales of electricity and other electronic means will account for half of the total sales.

This year, Internet sales account for 1/4 of total sales.

Meanwhile, luxury electric providers, including Net-a-Porter and Yoox, are also facing more pressure from traditional retailers and personal fashion brands.

The latter often encircle consumers by direct camp, and do not want to sell their products to intermediaries for sale.

"I think their advantages are fading," said Luca Solca, an analyst at Bank of Paris. "I predict that more and more luxury brands will try to build their own network sales platform," said Luca Solca.

Net-a-Porter, which focuses on selling seasonal fashion, and Yoox, which is positioned in the anti season fashion, will eventually merge into a company. This means that a new business tycoon is rising, and it will be able to compete effectively with its increasingly powerful rivals.

"Today, we opened the door to the world's largest luxury store," shortly after the announcement of the merger in late 3. "This is a store that never closes. It has no geographical boundaries. It links up tens of thousands of fashion consumers around the world, inspires them, provides services for them, and gives them the opportunity to reach the top fashion design brand."

Investors seem to recognize the future of the joint venture.

After the merger news, Yoox's share price jumped 22 percentage points, and the share price rose 44 percentage points at the beginning of the merger.

Since the beginning of October, the share price of the new company Yoox Net-a-Porter has climbed by 22%.

The peak group is also very optimistic about the future of Yoox Net-a-Porter, holding nearly 50% of the company's shares.

However, Massenet wrote another letter to John Rupert, the chairman of Johann Rupert in February 26th.

In that letter, Massenet complained that the group and Yoox had negotiated the merger, but they did not know it until two weeks later.

Massenet disclosed that a consortium had intended to buy Net-a-Porter at a price of 1 billion 400 million, which was more than 50% higher than that of Yoox.

Members of the consortium include Certares investment company, Tiger Global Management (Global) and New Enterprise Associates.

All potential investors stressed that their initial valuation was carefully assessed.

Massenet also pointed out in his letter that other enterprises, including Cond Nast, also showed great interest in participating in Net-a-Porter Nast.

The merger will enable the group to hold more than 40% of its shares in the newly established company, and the remaining shares will be cashed at 620 million pounds.

The promise is that Net-a-Porter will be listed in three years, and the company will get a higher valuation.

"We have a lot of concerns about the development strategy and corporate culture adaptation, but we are particularly surprised at the purchase price proposed by Yoox."

Massenet wrote.

The representative of the summit group declined to comment on Busquets's views.

The spokesman for Yoox Net-a-Porter has not yet made a statement.

A spokesman for Massenet also declined to be interviewed.

{page_break}

Representatives of Certares, tiger Global Fund, Enyi investment and Nash, Kangtai declined to comment or failed to give corresponding responses.

Over the past few years, analysts have been questioning whether the Net-a-Porter should continue to hold its focus or focus on its core business.

Under the holding of the group, Net-a-Porter is losing money every year, even though its sales are growing.

According to the group, it is reasonable to sell Net-a-Porter to Yoox, because it will be able to integrate two of the largest luxury electric providers, thus creating a new business model, and its scale will be considerable.

Busquets, who was born in Venezuela, is the original shareholder of Net-a-Porter. After the acquisition of the controlling stake of the company, she still holds 2.3% of the shares.

In a series of letters, her wording is intense.

Yoox "is obviously the inferior company of Net-a-Porter," she wrote to the March 28th Richard Lepeu, a joint CEO of the group.

In the letter, Busquets not only asked senior management acquiring company to share all the stocks, but also put forward many options, including merging the company with the company that she thought was more suitable, such as Barney department store.

She wrote in her letter that if Net-a-Porter's valuation could reach 1 billion 500 million pounds, she would be satisfied with the merger and acquisition plan.

In June 12th, in view of the company's financial performance, Busquets thought that Net-a-Porter should get a higher valuation.

In a letter to the board of directors of the group, she wrote that she hired Morgan Stanley bankers to assess the business, and they thought that Net-a-Porter's business value was more than 2 billion pounds.

According to insider sources, Busquets even hired two high level law firms, the American Schiller law firm and the David king joint law office in England, looking for the possibility of legal settlement.

The gap between Busquets and the peak group was not overnight. In the early years, the group had bought most of Net-a-Porter's shares and other small shareholders from Busquets's father. The seeds of discord had already been planted. Busquets believed that these shareholders were under the pressure of the group.

"We are considering the possibility of judicial proceedings," Busquets wrote in a statement.

I want to make sure that entrepreneurs in the future can protect themselves and not make the same mistakes as us. "

In October, just after the merger, Ma Na sold his shares and resigned from Yoox Net-a-Porter.

Solca, an analyst at Bank of Paris, said he thought the price offered by Yoox was reasonable, but he understood that Busquets might hold different views.

"The reason is hard to use.

"Clear the way," he said.