Zalando to Build Market Share Buying Fellow German E-tailer About You

LONDON — Zalando is looking to become an even bigger player in the European online fashion market with the acquisition of fellow German e-tailer About You.

Zalando said Wednesday that About You’s majority shareholders had reached binding agreements to sell their shares, which represent around 73 percent of the company’s share capital. Zalando said it intends eventually to acquire up to 100 percent of About You’s share capital.

The majority shareholders in About You are Otto Group; the Otto Family; Bestseller’s investment arm Heartland; and the About You management.

About You’s founders and management board members, Sebastian Betz, Tarek Müller, and Hannes Wiese, will retail their current roles as part of the combined group.

Robert Gentz, co-chief executive officer and co-founder of Zalando, said the deal would help the group cover a larger share of the European fashion and lifestyle e-commerce market.

The plan is for Zalando to co-exist with About You so that both companies can continue to serve their respective demographics. In the long term, Zalando aims to achieve 100 million euros per annum in combined earnings before interest and taxes.

Founded in 2014 as a subsidiary of the Otto Group, About You works with more than 27,000 content creators to combine shopping with entertainment through live events, interactive formats, and social media. It launched a high-profile collaboration with American model Kendall Jenner in 2021.

Billed as one of Germany’s largest fashion retailers, About You sells to more than 12 million active customers across Europe, and adopts a mobile-first approach to shopping some 2,000 brands, which include Polo Ralph Lauren, Tommy Hilfiger, Lacoste, Levi’s, Nike and Vero Moda.

From a business-to-business perspective, Gentz believes About You’s cloud-based enterprise shop system Scayle will complement Zalando’s own e-commerce operating system Zeos. He foresees the creation of “an even more advanced e-commerce operating system that enables brands and retailers to manage their multi-channel business across Europe and beyond.”

Scayle is one of the fastest-growing software-as-a-service platforms worldwide, and is already highly profitable. It offers tailored enterprise software solutions to more than 200 fashion and lifestyle shops across Europe and North America.

Zalando said About You’s operations add scale and complementary capabilities, and play into Zalando’s ecosystem strategy, unveiled in March. As reported, the German e-commerce giant aims to seize 15 percent of Europe’s 450-billion-euro fashion market by tweaking its B2B and B2C strategies.

Zalando argued that 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.”

The group is expected to grow gross merchandise volume and revenue until 2028 at a 5-year compound annual growth rate of between 5 percent and 10 percent.

Müller, who also serves as CEO of About You, said the team is eager to move the success stories of Zalando and About You to the next level.

“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,” he said.

The acquisition will also mark a deepening collaboration between Zalando and About You on the sustainability front.

In 2022, the two, together with Yoox Net-a-Porter, launched the Fashion Leap for Climate platform, which supports fashion brands in measuring their own carbon footprints and setting targets that align with climate science.

In the future, Zalando and About You said they would intensify their joint efforts to empower their customers to make informed shopping decisions.

Subject to regulatory approvals, the new deal is expected to close in the summer of 2025.

Zalando has set the offer price at 6.50 euros per share, representing 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 Dec. 10, 2024.

Otto Group, one of the world’s largest online e-commerce operators, said the proposed merger offers “a unique opportunity for sustainable growth and a successful future for About You.”

It added that About You has been managed as an investment company within the corporate portfolio since 2018, and the executive board and shareholders of the Otto Group are convinced of About You’s business model. 

“The company’s development – particularly in the ongoing fiscal year 2024/25 – is very positive, as evidenced by growing revenues and a positive EBITDA in an extremely competitive market environment. However, this strong performance has unfortunately not been reflected in the stock price for years. The planned strategic transaction, aimed at creating a strong European partnership, offers significant opportunities for both online fashion retailers as well as their customers and partners,” said Otto Group.