Coupang Finalizes Purchase of Troubled Farfetch
Coupang said Wednesday it has completed the acquisition of Farfetch Holdings plc, a deal that was first announced on Dec. 18.
Coupang said in a brief statement that by providing access to $500 million in capital, Farfetch "will continue delivering exceptional services for its brand and boutique partners," and to more than 4 million customers worldwide.
More from Sourcing Journal
The company added that by leveraging Coupang's operational know-how and logistics, "Farfetch is now well-positioned to pursue steady and thoughtful growth."
Coupang, which purchased Farfetch alongside the San Francisco-based firm Greenoaks Capital, is a Fortune 200 company listed on the New York Stock Exchange. It has operations and support services in markets including South Korea, Taiwan, Singapore, China and India.
It compares, albeit on a smaller scale, to Alibaba in China and, according to industry sources, has been looking to move upmarket into fashion and luxury goods services.
It purchased Farfetch as part of a "pre-pack," or planned, administration process for the London-based platform, which had struggled to turn a profit and which was running out of cash.
As a result of the Farfetch sale all investors, including founder, CEO and chairman José Neves , were zeroed out, with Coupang now fully in control of the business.
On Wednesday Coupang did not specify whether there would be any job losses, but sources familiar with the company said Coupang is keen to retain current management, including Neves.
The sources added that trading was robust over the holiday season and, going forward, marketing spend will be diverted to "driving transactions" rather than building the Farfetch brand and image.
Coupang is understood to be taking a "no-nonsense, granular approach" to understanding the Farfetch business as it attempts to tighten operations.
Negotiations to sell non-core assets in the Farfetch portfolio, such as Browns and New Guards Group, are ongoing, the sources said.
"For the moment, it's business as usual," said one source with knowledge of the company.
It is understood that Neves is on leave, and it remains unclear when he will return to the business.
Separately, a spokesperson for the Farfetch bond holders who are disputing the sale to Coupang and looking to recoup their investment, declined to comment.
As reported on Friday, bond holders in possession of more than half of Farfetch's 3.75 percent convertible senior notes, due in 2027, said they were "mobilizing to challenge" Coupang's proposed purchase of Farfetch.
They also argue that Coupang has undervalued Farfetch, and that the company was not transparent with regard to its financial difficulties in the months leading up to the fire sale on Dec. 18. They have not specified how much money they are seeking.
