- Wednesday, October 16, 2024
Shares of Coupang experienced a decline after the announcement of its acquisition of online luxury company Farfetch Holdings. The stock saw a decrease of 3.7% and is currently priced at $16.39. However, despite this setback, shares are still up by 11% year-to-date.
The acquisition of Farfetch by the global retailer is seen as a strategic move that will position Coupang as a leader in the personal luxury goods market. Additionally, Farfetch will gain access to $500 million in capital through this deal.
To facilitate the transaction, Coupang and investment firm Greenoaks Capital Partners have established a limited partnership that will acquire Farfetch's business and assets.
Farfetch had experienced a substantial decline in its shares last month when luxury group Richemont announced its decision to not invest further in the e-commerce company. It was rumored that Farfetch's founder and CEO, José Neves, was considering taking the company private with support from Richemont and e-commerce giant Alibaba.
During the same period, Farfetch also revealed that it would not adhere to its previous guidance, issue new guidance, or release third-quarter results by the Nov. 29 deadline.
Following Coupang's announcement of the acquisition on Monday, Richemont declared that it would not proceed with a planned transaction involving Farfetch and its Yoox Net-A-Porter platform. Furthermore, Richemont anticipates losing out on convertible senior notes that were previously issued by Farfetch.
It is important to note that the completion of this deal is subject to an exclusivity period until April 30. If Farfetch enters into a competing transaction during this period, it will be required to pay a termination fee of $20 million to the limited partnership.
Coupang has not disclosed a specific timeline for the completion of the acquisition.
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