Zalando acquires ABOUT YOU for 1.1 billion euros

Zalando has decided to acquire its competitor ABOUT YOU, according to both companies, in order to better serve the needs of customers and partners through their combined and diverse B2C and B2B offerings, enabling the combined group to cover a larger share of the European fashion and lifestyle e-commerce market. The companies have entered into a definitive merger agreement under which Zalando intends to submit a voluntary public tender offer to acquire up to 100% of the share capital of ABOUT YOU.

The management board and the supervisory board of ABOUT YOU welcome the strategic transaction, which brings together two founder-led teams with a strong cultural fit, entrepreneurial track record and highly complementary capabilities. Subject to the review of the offer document to be published by Zalando, the management board and supervisory board of ABOUT YOU intend to recommend shareholders to accept the offer. ABOUT YOU’s three founders and management board members Sebastian Betz, Tarek Müller and Hannes Wiese are committed to accepting the offer and continuing their successful work in their current roles.

Major ABOUT YOU shareholders Otto Group, Otto Family, HEARTLAND and the ABOUT YOU Management entered into binding agreements to sell their ABOUT YOU shares, representing about 73 percent of ABOUT YOU’s share capital, through accepting the public offer or separately, to Zalando.

The intended public tender offer by Zalando of 6.50 euros per ABOUT YOU share represents a premium of 12 percent to the median analyst target price of 5.80 euros and a premium of 107 percent to ABOUT YOU’s 3-month volume-weighted average share price on 10 December 2024, enabling realisation of significant value for existing ABOUT YOU shareholders. The transaction is expected to close in summer of 2025, subject to obtaining relevant regulatory approvals. Zalando is being advised by J.P. Morgan as financial advisor, Sullivan & Cromwell as legal counsel, and FGS Global as communications advisor. ABOUT YOU is being advised in this transaction by Deutsche Bank and White & Case.

“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,” said Robert Gentz, co-CEO and co-founder of Zalando. “In B2C, we can offer customers and brands distinct and rich shopping experiences. In B2B, combining our complementary software capabilities, Tradebyte and SCAYLE, will create an even more advanced e-commerce operating system that enables brands and retailers to manage their multi-channel business across Europe and beyond.”

ABOUT YOU’s operations add scale and complementary capabilities, and also play into Zalando’s ecosystem strategy, communicated in March 2024, to build a pan-European fashion and lifestyle e-commerce ecosystem around two growth vectors, B2C and B2B, to deepen relationships with customers and partners. The transaction comes with compelling value creation opportunities that the two companies, operating in the same industry, can generate by collaborating in a wide range of 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.

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 the B2C growth vector, adding ABOUT YOU will enable Zalando to implement a dual-brand strategy. Each brand will retain its distinct identity while leveraging synergies in logistics, payment infrastructure and commercial collaboration. This strategic move will allow the combined entity to provide tailored and separate shopping experiences, effectively meeting the unique needs and preferences of their customers.

Zalando appeals to fashion enthusiasts and is therefore more brand-led, differentiating itself by offering an unmatched selection of more than 6,000 lifestyle brands to its more than 50 million customers. It excites customers with the best possible quality shopping experience, relating to every part of the customer journey: a high-quality brand assortment, digital experience, sustainable and inclusive brand choices, as well as personalised and localized convenience. Zalando is also building on these high-quality relationships to expand its role in customers’ lifestyle journeys by turning categories like Sports and Kids & Family into captivating experiences, and by integrating content and data into commerce to offer personalised inspiration and entertainment.

ABOUT YOU appeals to a young fashion audience and is therefore more style-led. It celebrates individual styles, sets trends and combines shopping with entertainment through live events, interactive formats and social media hosts to create a vibrant fashion community. With a network of over 27,000 content creators, ABOUT YOU offers over 12 million active customers access to 700,000 styles from renowned brands, innovative manufacturers, private labels and unique celebrity collections. Its collaborations with international talents from sports, music, film and modelling have led to 119 exclusive collections for its style-conscious customers.

In the B2B growth vector, ABOUT YOU’s SCAYLE software unit will perfectly complement Zalando’s e-commerce operating system ZEOS which enables brands and retailers to manage their multi-channel business across Europe within one unified platform, consisting of logistics infrastructure, software and service offerings, regardless of whether they take place on or off the Zalando platform.

Zalando’s Tradebyte software unit is already helping retailers and brands sell their products via various online marketplaces. SCAYLE is now extending Zalando’s offering with a bespoke solution to serve brands’ and retailers’ own webshops and apps, often the most important sales channels for many brands, even for the ones that are running multi-channel businesses.

SCAYLE is one of the fastest-growing Software-as-a-Service commerce platforms globally and already highly profitable. SCAYLE offers tailored enterprise software solutions for brands and retailers across verticals, with an especially large amount of features for the fashion and lifestyle segments serving more than 200 shops across Europe and North America.

“We are thrilled to team up with so many brilliant entrepreneurial colleagues and together move the success stories of Zalando and ABOUT YOU to the next level,” said Tarek Müller, the co-founder and co-CEO of ABOUT YOU. “This transaction creates something truly unique, with two distinct and independent B2C businesses serving the specific needs of their customers. At the same time, the complementary strengths of the B2B businesses will seamlessly align to deliver a comprehensive and optimized offer for clients in logistics, software and services."

The deal will also help the joint group enable positive change for a more sustainable and inclusive future of the fashion and lifestyle industry, helped by its larger scale and higher relevance for customers and brands. Both companies share a long-standing partnership in this field and have jointly launched several initiatives to promote responsibility within the fashion industry, such as FASHION LEAP FOR CLIMATE and FASHION AGAINST FASCISM. In the future, Zalando and ABOUT YOU will also intensify their joint efforts to empower their customers to make informed shopping decisions.

The intended public tender offer by Zalando of 6.50 euros per ABOUT YOU share represents a premium of 12 percent to the median analyst target price of 5.80 euros and a premium of 107 percent to ABOUT YOU’s 3-month volume-weighted average share price on 10 December 2024, enabling realisation of significant value for existing ABOUT YOU shareholders. The transaction is expected to close in summer of 2025, subject to obtaining relevant regulatory approvals. Zalando is being advised by J.P. Morgan as financial advisor, Sullivan & Cromwell as legal counsel, and FGS Global as communications advisor. ABOUT YOU is being advised in this transaction by Deutsche Bank and White & Case.