Farfetch sold to South Korea’s Coupang, gets 500 million dollar injection

Farfetch has been rescued after it found a buyer in Coupang, a South Korean multi-industry retail giant that has scooped the luxury fashion e-tailer up from its speculated financial crisis.

As part of the agreement, Coupang, a NYSE-listed firm, will provide Farfetch with access to 500 million dollars of capital to continue its operations, both on the consumer front and in its provision of technology to brands and retailers.

Speaking on the acquisition, Coupang’s founder and chief executive officer, Bom Kim, said: “Farfetch is a landmark of the luxury landscape and has been a transformative force in demonstrating that online luxury is the future of luxury retail.

“Farfetch will rededicate itself to providing the most elevated experience for the world’s most exclusive brands, while pursuing steady and thoughtful growth as a private company. We also see tremendous opportunities to redefine the customer experience for luxury clients everywhere.”

While for Coupang, the deal places the firm as a leader in the luxury goods segment, for Farfetch the move provides the opportunity to cement its place in South Korea, which “has the world’s highest per capita spending on personal goods”, the release noted.

Farfetch to get leg up in lucrative Korean luxury market

According to Coupang, investment firm Greenoaks had “brought substantial financial expertise to the transaction”, acting as the company’s investment partner in the acquisition.

In his own statement, José Neves, Farfetch’s founder, CEO and chairman said: “Coupang’s proven track record and deep experience in revolutionising commerce will enable us to deliver exceptional service for our brand and boutique partners, as well as for our millions of customers around the world.

“We are thrilled to be partnering with such a respected Fortune 200 company that is committed to investing in innovations that transform all aspects of the customer experience with Farfetch.”

Signs of trouble at Farfetch began emerging late last month when it was speculated that Neves had been mulling a potential offer that would delist the company and take it private amid increasing pressure on its stock price.

Further doubt was thrown into the mix when the retailer announced it would be delaying the publication of its third quarter results, leaving its impending partner Richemont on the fence as to whether it was to continue with allowing Farfetch to acquire a stake in Yoox Net-a-Porter.

This article was updated December 18, 16:41, to reflect an update from Richemont on the status of its agreement with Farfetch.

Richemont has now confirmed that its prior agreement in regards to the acquisition of Yoox Net-a-Porter (YNAP) by Farfetch and Symphony Global, as well as the adoption of Farfetch’s Platform Solutions and the opening of e-concessions of Richemont brands on the platform, will no longer go ahead.

The luxury group reaffirmed that it had no plans to lend or invest in Farfetch, while the value of senior notes issued by Farfetch to Richemont in November 2020 amounting to 218 million euros will not be repaid.

As a result, Richemont said it would be pursuing alternative options to enforce its ‘Luxury New Retail’ strategy as it looks to replatform in order to reach the object.