Zalando's Bold Move: Public Tender Offer for ABOUT YOU

Zalando, the European fashion and lifestyle e-commerce giant, has made a significant move in the market by announcing a voluntary public tender offer to acquire up to 100% of ABOUT YOU's share capital. This strategic acquisition is set to reshape the European fashion and lifestyle e-commerce landscape, bringing together two founder-led teams with a strong cultural fit and complementary capabilities.

The planned offer of 6.50 euros per share represents a premium of 12% to the median analyst target price of 5.80 euros and a premium of 107% to ABOUT YOU’s 3-month volume-weighted average share price on 10 December 2024. Major ABOUT YOU shareholders, including Otto Group, Otto Family, HEARTLAND, and the ABOUT YOU Management, have entered into binding agreements to sell their shares, representing about 73% of ABOUT YOU’s share capital, to Zalando.

In B2C, the combined group will drive a dual-brand strategy, offering distinct shopping experiences to better serve the specific needs of customers and partners. In B2B, ABOUT YOU’s SCAYLE unit complements Zalando’s e-commerce operating system ZEOS, creating an even more advanced e-commerce operating system that enables brands and retailers to manage their multi-channel business across Europe within a unified platform featuring logistics, software, and service offerings.

The transaction unlocks significant value-creation opportunities in areas such as B2B, logistics, payments, and commercial collaboration. In the longer term, Zalando targets significant Group EBIT synergies of around 100 million euros per annum, indicating the potential for substantial cost savings and increased profitability.

Underpinning management’s conviction in the value creation of this transaction, Zalando is confirming its medium-term outlook also for the combined group. Zalando, including ABOUT YOU, is expected to grow GMV and revenue until 2028 at a 5-year compound annual growth rate of between 5% and 10%. The combined company expects an adjusted EBIT margin in 2028 in the corridor of 6% to 8%, yielding a significant increase in absolute profit by creating a combined group at a larger scale. Together, Zalando and ABOUT YOU aim to cover a larger share of the 450-billion-euro European fashion market in the long term than previously targeted.

In conclusion, Zalando's public tender offer for ABOUT YOU is a strategic move that brings together two strong players in the European fashion and lifestyle e-commerce market. The combination of their B2C and B2B offerings is expected to drive significant synergies and cost savings, further strengthening Zalando's position in the market. As the transaction progresses, investors should keep a close eye on the developments and potential benefits that this merger could bring to both companies and the broader market.