Coupang to buy luxury platform Farfetch at $500 mn

The Korean online marketplace is on track to post its first-ever annual profit in 2023

Coupang went public on the New York Stock Exchange in 2021
Coupang went public on the New York Stock Exchange in 2021
Hyeon-woo Oh 2
2023-12-19 11:45:48 ohw@hankyung.com
Mergers & Acquisitions

Coupang Inc., South Korea’s leading e-commerce platform, plans to acquire Farfetch Holdings, a London-based online retailer for luxury goods, in a $500 million deal aimed at bolstering its clothing business, considered its weak spot.

The buyout agreement, announced on Monday, comes as Coupang is on track to post its first-ever annual profit on record sales this year, while providing a lifeline to the fashion platform teetering on the brink of bankruptcy.

Coupang has joined forces with Greenoaks Capital, a US investment firm, for the acquisition, under which it will hold an 80.1% stake in Farfetch via a company to be established for the deal. Greenoaks will take the remaining 19.9% stake.

After the deal closes, Farfetch will delist from the New York Stock Exchange.

Coupang said the buyout will position it as a leader in the $400 billion global personal luxury goods market.

Its push into the luxury retail market is expected to gain momentum from the growing luxury goods market in South Korea, which has the world’s largest per-capita spending on personal luxury goods.

Shoppers line up outside the Chanel store of Shinsegae Department Store's main branch
Shoppers line up outside the Chanel store of Shinsegae Department Store's main branch


“Coupang’s operational excellence and innovative logistics combined with Farfetch’s leading role in the luxury ecosystem will drive exceptional experiences for customers, boutiques and brands across the world,” Coupang said in a statement.

Clothing has been pointed out as its weakness, compared to its leading position in the domestic online grocery and products market.
 
Farfetch is a top online platform for global designer brands, including Chanel, Louis Vuitton and Yves Saint Laurent, as well as British label Browns.

It also deals with streetwear brands such as Off-White and Palm Angels and goods from Stadium Goods, a US resale platform for sneakers.

Coupang has pioneered the same-day and dawn-delivery market in South Korea
Coupang has pioneered the same-day and dawn-delivery market in South Korea

“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,” Bom Kim, founder and chief executive of Coupang, said in the statement.

Farfetch was founded in 2007 by its CEO and Chairman José Neves. It charges 30% of the transaction price in fees.

In 2020, it attracted a combined $1.1 billion in investment from Paris-based Richemont, the owner of Cartier and China’s Alibaba, as part of efforts to expand into China.

The share price of Farfetch Holdings has nosedived from its 2021 peak
The share price of Farfetch Holdings has nosedived from its 2021 peak


However, it has fallen into financial difficulties after making a string of acquisitions and investments.

One year after its 2018 trading debut on the New York Stock Exchange, it acquired New Guards Group, the owner of the Off-White brand, for $675 million.

In 2022, Farfetch invested $200 million into Neiman Marcus Group, a high-end goods retailer.

Its market capitalization has nosedived by more than 90% to $250 million from its peak of $23 billion recorded in early 2021.

Write to Hyeon-woo Oh at ohw@hankyung.com
 


Yeonhee Kim edited this article.
#Coupang #Farfetch #Greenoaks #BomKim #JoséNeves #ecommerce #luxurygoods #luxuryplatform

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