A surprise takeover offer from competitor Zalando boosted About You shares on Wednesday. The takeover target’s shares jumped by almost 65 percent, while the bidder’s shares fell from their high for a year and a half. The Zalando stocks lost up to nine percent as the bottom of the DAX, which they still were until recently – even if the minus was limited to a good four percent.
With the offer for About You, Zalando is forging a German online giant in the fashion retail sector. The offer is 6.50 euros per share, after the closing price the previous day was 3.90 euros. At 6.42 euros, the About You price came very close to this amount on Wednesday. The share made up for poor price development so far this year. While Zalando had recovered by more than 60 percent in 2024, the takeover target’s price was still down around 10 percent the day before.
As capital market expert Jürgen Molnar from the broker Robomarkets says in an initial assessment, the purchase price could be “a bargain” given the price development of About You. Because of the amount of the takeover premium, he assumes “promising future fantasies after a merger.” Zalando’s investors “are not screaming about happiness,” he said, referring to a well-known advertising slogan from the online retailer. The expert also spoke of profit-taking given the significant increase this year. He suspects that the deal could pay off in the long term.
Analyst Thomas Maul from DZ Bank referred to the high level of cash in Zalando’s cash register, the necessity of which had recently been questioned by analysts. Using these funds for a takeover makes sense in principle, even if he appears somewhat surprised by this deal. The merger creates a dominant player, but the valuation appears expensive. Compared to Zalando, About You also achieves a relatively low margin.
Consolidation step in the fashion market
Other analysts rated the project similarly. Volker Bosse from Baader Bank sees a strategic sense behind this and emphasized that Zalando could easily afford the more than one billion euros for About You given its cash holdings, which were recently estimated at 2.4 billion euros. From a market perspective, the takeover is a consolidation step in the fashion market. For the time being, however, Zalando’s profitability will suffer as a result of the merger, as About You is still making losses.
Through the takeover, Zalando wants to use the strengths of both companies for medium-term synergies. In the longer term, the company sees scope for cost savings of around 100 million euros per year with an impact on earnings. For a successful takeover, Zalando has already secured almost three quarters of the share capital through binding agreements with founders and board members.
About You went public in 2021 during the pandemic at a time when online retailers were very popular with investors. However, not much was left of the original issue price of 23 euros. At a low of 2.68 euros, 90 percent less was paid for the shares in September. Zalando had also moved up to 84 percent away from the record set in 2021 up to the record low in January. (dpa)