South Korean e-commerce giant Coupang to buy online luxury firm Farfetch

NEW YORK - Farfetch, the beleaguered luxury e-commerce platform that has spent months teetering on the brink of bankruptcy, has found its white knight: The retailer said on Dec 18 that Coupang, described as South Korea’s answer to Amazon, would acquire it, providing a US$500 million (S$666 million) lifeline.

London-based Farfetch was once feted as the most dominant force in luxury fashion. It went public on the New York Stock Exchange in 2018 and, as consumers and luxury brands flocked to the site, its value shot up, reaching more than US$23 billion at its peak in 2021.

But spiralling costs and debt, a string of high-risk investments and a slowdown in the global luxury market spurred a plunge in the company’s share price to a market value of around US$200 million.

The struggles led to a desperate hunt for fresh investment by its founder and chief executive Jose Neves, a 49-year-old Portuguese entrepreneur.

The deal caps a painful year for many former leading lights of luxury e-commerce.

News reports over the weekend suggested that Matchesfashion.com – bought by Apax Partners in 2017 for around US$1 billion – would soon be sold to Fraser Group, owned by British retail tycoon Mike Ashley, for around US$63 million.

In Coupang, South Korea’s biggest e-commerce retailer, Farfetch found an alternative to bankruptcy that will allow it to continue operations.

Coupang, which made its market debut in New York in 2021, has e-commerce operations in markets including South Korea, Taiwan, Singapore and India, and also offers grocery, payment and video streaming services.

Greenoaks, a global investment firm, is Coupang’s investment partner in the acquisition. As part of the deal, Farfetch shares will be delisted and its existing shareholders will be wiped out. Farfetch shares fell 35 per cent in pre-market trading on Dec 18 after the deal was announced, before their trading was halted.

“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,” said Mr Neves, who will remain at the company in an unspecified role.

Mr Bom Kim, founder and CEO of Coupang, called Farfetch “a landmark of the luxury landscape” and a “transformative force in online luxury”.

“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,” he said in a statement.

An agreement for Farfetch to buy a 47.5 per cent stake in its rival Net-a-Porter from the luxury goods group Richemont has been terminated, Richemont said in a statement on Dec 18.

Farfetch, which connects shoppers with independent boutiques and offers e-commerce services for larger luxury brands and retailers, sought to reassure its retail clients.

“Farfetch will continue to operate as normal, but with a stronger balance sheet and cash position,” the company said in an e-mail, adding that its partners would “continue to work with the Farfetch team as you have for the last 15 years”. NYTIMES