Zalando: share price plummets after About You takeover

(CercleFinance.com) - Online clothing and footwear retailer Zalando fell on Wednesday on the Frankfurt stock exchange following the announcement of the takeover of its smaller German competitor About You.


At around 11:00 a.m., Zalando shares lost 4.6%, making it one of the biggest decliners on the Europe STOXX 600 index. At the same time, About You shares on the Frankfurt stock exchange soared by almost 64%.

This morning, the clothing group announced its intention to launch a takeover bid for 100% of About You's share capital at a unit price of 6.5 euros, representing a 62% premium to last night's closing price (3.9 euros).

The total price of the transaction is estimated at around 1.2 billion euros.

In a press release, Zalando states that a block of reference shareholders, notably the Otto family and About You's management team, have agreed to sell 73% of the capital.

The Berlin-based company says it is aiming for annual synergies of around €100 million per year in operating income through the pooling of resources, particularly in logistics and payments.

RBC analysts commented: "We believe that About You will bring in a younger, more style-conscious clientele, as Zalando is more focused on high-end and everyday clothing".

From their point of view, the fall in the share price is explained by the prospect of lower shareholder returns in the wake of this targeted but costly acquisition.

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