On December 11th, Zalando, the largest online retailer in Europe, plans to acquire About You.
The two companies announced last Wednesday (December 11th) that the transaction valued the smaller competitor at 1.13 billion euros (1.19 billion US dollars), marking the next major move in integrating the European online clothing market.
The soaring inflation and rapid growth of cost-effective online platforms such as Shein have polarized the European clothing retail industry and driven transactions, with larger participants hoping to consolidate their market share by acquiring smaller competitors.
After the announcement of the transaction, Zalando's stock price fell by 9% as analysts warned that the company's pricing may be too high and pointed out that profitability will be dragged down in the short term due to About You being in a loss making state. The largest shareholder of About You (including German retail group Otto) has committed to accepting the offer.
Zalando has been expanding its logistics business to meet strong consumer demand. The company claims that this move is an opportunity to unleash synergies, especially in the B2B field.
This acquisition will transfer About You's enterprise software platform Scayle, which is used by 200 stores in Europe and North America, including optical company Fielmann and football club Manchester United.
Co CEO Robert Gentz stated that Zalando sees this acquisition as a way to reach out to young shoppers when it comes to selling to retail customers, as About You actively collaborates with social media influencers for fashion exploration.
In the long run, this is indeed a very valuable transaction with added value, "said Chief Financial Officer Sandra Dembeck in a media call
The company stated that its goal is to achieve an annual profit growth of 100 million euros through this transaction in the long term.
When asked about possible layoffs, Robert Gentz, co CEO of Zalando, said, 'If there are any, our team will only make limited changes.'. (1 USD=0.9522 EUR)