What happened

Farfetch Limited (FTCH 1.03%) stock had quite the turn on the runway on Wednesday. On a generally unexceptional day for the broader market, shares of the online luxury fashion specialist rocketed more than 21% skyward. Investors very much liked the look of the company's new acquisition.

So what

Farfetch announced that it has acquired 47.5% of e-commerce luxury fashion retailer Yoox Net-a-Porter (YNAP) in a somewhat complicated transaction. The company's owner, Switzerland-based Richemont, sold that large stake to Farfetch, plus a far smaller one (at just over 3%) to privately held investment firm Symphony Global.

That's the first stage of the deal. For this phase, Farfetch is to pay 53 million to 58.5 million of its class A ordinary shares (anywhere from 10% to 13% of its issued share capital). On the fifth anniversary of the completion of this stage, Richemont is to be paid an additional $250 million, most likely in the same securities. The seller will also make available a committed, $450 million credit facility to YNAP for a period of 10 years. 

The second stage will see Farfetch acquire the remainder of YNAP, through a put-and-call option "mechanism." At that point, Farfetch will pay fair market value in its class A stock for the remaining YNAP shares.

Now what

Richemont, the company perhaps best known as the owner of the popular Cartier and Van Cleef & Arpels high-end jewelry brands, had struggled with Yoox Net-a-Porter since purchasing it in 2010. Investors were obviously cheered by Farfetch's committing only equity to the deal, instead of cash, while Yoox Net-a-Porter seems like a solid fit for the fashion company's overall business.