Coupang, a prominent e-commerce entity listed on the New York Stock Exchange, has revealed plans to acquire Farfetch Holdings in a strategic move aimed at bolstering the struggling luxury fashion retailer with a capital infusion of $500 million. This partnership was confirmed through a joint statement issued by both companies.
Farfetch, renowned for its online luxury fashion offerings, has encountered substantial challenges amidst an industry slowdown. These hurdles have complicated the company’s ability to generate profits from technology investments, leading to recent credit rating downgrades.
The platform operates as an e-commerce marketplace catering to luxury brands, serving as a primary selling avenue for numerous small brands and boutiques. Additionally, Farfetch provides sophisticated back-end technology to facilitate e-commerce operations for renowned entities like Harrods and Ferragamo.
Coupang, recognized for its diversified services including food delivery, video streaming, and payment solutions across markets in South Korea, Taiwan, Singapore, China, and India, struck this pivotal deal with an investor group holding more than 80 percent of Farfetch’s outstanding $600 million term loans.
The integration aims to leverage Coupang’s logistical expertise alongside Farfetch’s proficiency in marketing high-end brands, particularly to expand within South Korea’s burgeoning luxury goods market.
Greenoaks, an investment firm, joins forces with Coupang to support this initiative.
Amidst these developments, speculation about Farfetch’s founder and CEO Jose Neves considering the privatization of the company surfaced last month, as reported by The Telegraph.
JPMorgan played a pivotal role as an advisor to Farfetch throughout the acquisition process.
In a separate announcement, Richemont, the parent company of Cartier, disclosed the termination of its prior agreement to sell its online e-commerce platform, Yoox Net-a-Porter (YNAP), to Farfetch. Richemont emphasized exploring alternative strategies to power its brands’ e-commerce activities, citing their continuous operation with proprietary technology, Reuters news report said.
Furthermore, Richemont clarified that it did not anticipate the repayment of a $300 million loan issued to Farfetch in November 2020.
