Deutsche Bank stayed positive on Richemont ( OTCPK:CFRHF ) following the YNAP asset sale with a Buy rating reiterated.
Analyst Adam Cochrane noted the deal went off within the range of €1B to €2B being discussed by investors. He also said that given the sell-off in technology and lowered e-commerce valuation it brings to completion an issue for investors where there were fears a deal would not get done.
"The deconsolidation should deliver earnings accretion of c.2% (currently a 4% drag on EBIT but just under 50% will be held as a minority interest for the next few years) but there will be a c.400bp boost to group EBIT margins. Overall this allows Richemont to move on from YNAP, focus its technology platform with Farfetch and be a potential c.25% shareholder in Farfetch over time."
On the Richemont balance sheet, it was noted that here will be a €2.7B asset write-off reflecting the goodwill and intangible assets book value of YNAP being written down to the implied acquisition value.
Read the details on Farfetch's ( FTCH ) deal to acquire the YNAP stake.
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Richemont is a buy at Deutsche Bank after YNAP asset sale