Coupang, South Korea’s major e-commerce player often dubbed as the country’s answer to Amazon, has come to the rescue of beleaguered luxury e-commerce platform Farfetch. In a move that breathes new life into Farfetch, Coupang is set to acquire the struggling platform, injecting a $500 million lifeline. London-based Farfetch, once hailed as a dominant force in luxury fashion, faced financial turmoil with mounting costs, high-risk investments, and a slowdown in the global luxury market. Despite reaching a peak valuation of over $23 billion in 2021, the company’s share price plummeted, leading to a desperate search for fresh investment by its founder and CEO, José Neves.
The acquisition by Coupang marks a significant turn for Farfetch, whose shares will be delisted, and existing shareholders will face complete wipeout. The deal provides an alternative to bankruptcy, allowing Farfetch to continue its operations under the wing of Coupang. The South Korean e-commerce giant, which went public in New York in 2021, operates across various markets, including South Korea, Taiwan, Singapore, and India. Coupang’s diverse portfolio extends beyond e-commerce, encompassing grocery services, payment solutions, and video streaming.
Greenoaks, a global investment firm, is joining forces with Coupang as an investment partner for the acquisition. Farfetch founder José Neves, a Portuguese entrepreneur, expressed optimism about the collaboration, emphasizing Coupang’s track record and experience in revolutionizing commerce. Neves will retain a role within the company, though the specifics are yet to be disclosed. Coupang’s CEO, Bom Kim, acknowledged Farfetch’s impact on the luxury landscape, describing it as a transformative force in online luxury. Kim outlined Coupang’s commitment to elevating the experience for exclusive brands while pursuing measured and considerate growth as a private entity.
Amidst the acquisition, an agreement for Farfetch to acquire a 47.5 percent stake in its rival Net-a-Porter from luxury goods group Richemont has been terminated, as confirmed by Richemont in a statement. The deal between Coupang and Farfetch has repercussions for the latter’s shares, which experienced a 35 percent decline in premarket trading following the announcement.
In a bid to allay concerns among its retail clients, Farfetch reassured that it would continue to operate normally with a strengthened balance sheet and improved cash position. The company, known for connecting shoppers with independent boutiques and providing e-commerce services for larger luxury brands, emphasized its ongoing collaboration with partners.
This development punctuates a challenging year for prominent players in luxury e-commerce. Recent reports suggest that Matchesfashion.com, previously acquired by Apax Partners in 2017 for around $1 billion, is poised for a sale to Fraser Group, owned by British retail tycoon Mike Ashley, for approximately $63 million. As the luxury e-commerce landscape undergoes shifts and realignments, the Coupang-Farfetch deal stands as a strategic move to revive the fortunes of a once-celebrated platform in the industry.
