Coupang Plans 500M Dollars: In a strategic move, New York-listed e-commerce giant Coupang (CPNG.N) is set to acquire Farfetch Holdings (FTCH.N) in a deal designed to inject $500 million in capital into the beleaguered online luxury fashion retailer. The joint statement from the companies announced the acquisition plan, leading to a trading halt for Farfetch shares, valued at $226.7 million, and a 4.5% dip in Coupang’s shares.
Farfetch, a key player in online luxury marketplaces, has faced challenges amid an industry slowdown, making profitability elusive despite significant technology investments. The company’s efforts have been further complicated by credit rating downgrades in recent weeks. Farfetch operates a platform supporting small brands and boutiques in selling high-end fashion and jewelry online, while also providing back-end technology for department stores and renowned brands like Harrods and Ferragamo.
Coupang, operating across various markets including South Korea, Taiwan, Singapore, China, and India, aims to leverage its logistics expertise by combining forces with Farfetch. The strategic move seeks to expand Coupang’s presence in the rapidly growing luxury goods market in South Korea. The deal was struck with an investor group holding over 80% of Farfetch’s outstanding $600 million term loans, with investment firm Greenoaks participating alongside Coupang.
Also Read: Farfetch Faces Challenges Amid Luxury Slowdown and Changing Industry Dynamics
The joint initiative positions Coupang to enhance its capabilities and market reach, tapping into Farfetch’s experience in selling high-end brands. The move aligns with Coupang’s diverse portfolio, encompassing food delivery, video streaming, and payment services.
The announcement comes on the heels of reports last month suggesting talks between Farfetch founder and CEO Jose Neves and investors to potentially take the company private. The deal reflects Coupang’s strategic vision to revitalize Farfetch and capitalize on the growing luxury market in South Korea.
JPMorgan provided advisory services to Farfetch in facilitating the acquisition. Meanwhile, luxury conglomerate Richemont announced the cancellation of a previous deal to sell its online e-commerce activity Yoox Net-a-Porter (YNAP) to Farfetch. Richemont expressed openness to alternative options for powering the e-commerce presence of its brands.
The acquisition marks a significant development in the e-commerce and luxury retail landscape, signaling collaborative efforts to navigate challenges and capitalize on emerging market opportunities.
Our Reader’s Queries
What happened to Farfetch stock?
Farfetch Ltd. has announced that it anticipates being delisted from the NYSE and undergoing liquidation. As of Friday, Farfetch shares were valued at 64 cents and were subsequently halted on Monday morning. This information was disclosed by MarketWatch, a subsidiary of Dow Jones & Co.
What is Korea’s version of Amazon?
Coupang, Inc. is a major player in the South Korean online market and is often compared to Amazon due to its size and influence.