On December 18, luxury e-commerce platform Farfetch, which was on the verge of bankruptcy, was reportedly being acquired by South Korean e-commerce giant Coupang for $500 million.
Coupang, established in 2010, is a rapidly expanding e-commerce enterprise often referred to as the “Amazon of Korea.” In 2021, the company made its debut on the New York Stock Exchange. Currently headquartered in Seattle, USA, the company has e-commerce operations in markets such as South Korea, Taiwan, Singapore, and India, and also offers grocery, payment, and video streaming services.
London-based Farfetch, once a dominant force in the luxury industry, was listed on the New York Stock Exchange in 2018. As consumers and luxury brands flocked to the site, its value rose, peaking in 2021 at more than $23 billion.
Nevertheless, the company’s stock price experienced a significant downfall due to soaring expenses and debt, a series of risky investments, and a deceleration in the worldwide luxury goods industry. Consequently, the company’s market capitalization plummeted to approximately $200 million, indicating that it was on the brink of bankruptcy.
In this situation, Coupang worked with Greenoaks Capital Partners, an American investment firm, to provide $500 million in financial assistance. Anticipated to be finalized in the early months of the upcoming year, this agreement will enable Farfetch to sustain its operations and steer clear of an imminent financial collapse. While Farfetch’s founder, Jose Neves, will maintain his involvement in the company, all other directors will tender their resignations.
In August of this year, Farfetch had reached an agreement to purchase 47.5% of the shares of Yoox net-a-porter group, a prominent luxury e-commerce platform owned by Richemont. However, after this acquisition, Richemont announced the “cancellation” of said agreement. According to reports, Richemont’s possession of convertible bonds valued at $300 million, which were issued by Farfetch in November 2008, is deemed unlikely to be redeemed considering the prevailing circumstances.