In a significant move that’s set to reshape the European e-commerce landscape, German online retail giant Zalando has announced plans to acquire its rival, fashion group About You, for €1.1 billion ($1.2 billion). This strategic acquisition, announced on Wednesday, December 11, 2024, aims to establish a leading pan-European e-commerce platform, combining the strengths of two major players in the online fashion retail space.
Deal Details and Market Reaction
Zalando’s cash offer values About You at €6.50 per share, representing a substantial 107% premium over About You’s three-month average stock price. This valuation significantly exceeds About You’s closing price of €3.90 on Tuesday, December 10. The news of the acquisition has had a notable impact on both companies’ stock prices. While About You’s shares surged by approximately 65% on German exchanges, nearly aligning with the offered price, Zalando’s stock experienced a decline of around 6% in European trading.
Strategic Rationale and Synergies
The acquisition is part of Zalando’s broader strategy to strengthen its position in the European fashion and lifestyle e-commerce market, estimated to be worth €450 billion. By joining forces, Zalando and About You aim to create a more robust platform capable of competing effectively against fast-growing, low-cost competitors like Shein.Key aspects of the strategic rationale include:
- Dual-Brand Strategy: The combined entity plans to maintain both Zalando and About You as distinct brands, allowing for tailored shopping experiences that cater to different customer segments.
- Enhanced Market Presence: The merger is expected to significantly increase the group’s footprint in pan-European markets, leveraging the strengths of both companies.
- Synergies and Efficiency: Zalando targets significant Group EBIT synergies of around €100 million per annum in the longer term, primarily through collaborations in B2B services, logistics, payment solutions, and commercial partnerships.
- Complementary Capabilities: About You’s SCAYLE unit will complement Zalando’s e-commerce operating system ZEOS, creating a more comprehensive platform for brands and retailers to manage their multi-channel businesses across Europe.
Leadership and Cultural Fit
The deal brings together two founder-led teams with complementary capabilities and a strong cultural fit. About You’s management board members—Sebastian Betz, Tarek Müller, and Hannes Wiese—will continue in their current roles within the combined group, ensuring continuity and leveraging their expertise. Robert Gentz, Co-CEO and Co-founder of Zalando, expressed enthusiasm about the merger, stating, “Redefining fashion and lifestyle shopping by creating the best possible experience for customers and partners has always driven both our teams. I’m excited about how together we’ll be able to cover a larger share of the fashion and lifestyle market.”
Shareholder Support and Transaction Timeline
Major shareholders of About You, including the Otto Group, the Otto Family, HEARTLAND, and the company’s management team, have entered into binding agreements to sell their shares to Zalando. These shares represent approximately 73% of About You’s total share capital, demonstrating strong support for the transaction.The deal is subject to regulatory approvals and is expected to be finalized by the summer of 2025. Upon completion, the combined entity will be well-positioned to serve over 50 million customers across multiple European countries.
Financial Outlook and Market Impact
Zalando has confirmed its medium-term outlook for the combined group, projecting a 5-year compound annual growth rate of between 5% and 10% for GMV and revenue until 2028. The company expects an adjusted EBIT margin in 2028 to be in the range of 6% to 8%, indicating a significant increase in absolute profit due to the larger scale of the combined operations.This acquisition comes at a time when European online retailers face increasing pressure from fast-fashion giants like Shein. By pooling resources and expertise, Zalando and About You aim to create a more competitive and resilient e-commerce powerhouse capable of navigating the challenges of the rapidly evolving retail landscape.
Sustainability and Industry Impact
Both companies have a history of collaboration on sustainability initiatives, such as FASHION LEAP FOR CLIMATE and FASHION AGAINST FASCISM. The merged entity plans to intensify these efforts, leveraging its increased scale and relevance to drive positive change in the fashion and lifestyle industry.As the European e-commerce sector continues to evolve, this landmark acquisition between Zalando and About You marks a significant milestone. It not only reshapes the competitive landscape but also sets the stage for innovation, improved customer experiences, and potentially more sustainable practices in the online fashion retail space.
