The companies announced in a joint statement that Coupang, a publicly traded company based in New York, intends to acquire Farfetch Holdings (FTCH.N), a struggling online luxury fashion retailer, for $500 million in order to keep it operating.
On Monday, Coupang’s shares dropped 4.5% while trading in Farfetch’s, which has a market valuation of $226.7 million, was suspended.
A slowdown in the industry has affected Farfetch, an e-commerce startup that has assisted luxury companies in selling online. This has hindered the company’s efforts to turn a profit on its technological expenditures and led to credit rating downgrades in recent weeks.
Many tiny manufacturers and stores rely on Farfetch, an online luxury marketplace, as their primary sales channel for their upscale jewelry and clothing. Additionally, it offers department shops and luxury companies like Ferragamo and Harrods back-end technology for e-commerce.
The agreement was reached between Coupang, which provides meal delivery, video streaming, and payment services in South Korea, Taiwan, Singapore, China, and India, and an investor group that had more than 80% of Farfetch’s outstanding $600 million in term loans.
The world’s largest online retailer announced that it will leverage Farfetch’s luxury brand sales experience together with its logistical know-how to break into South Korea’s rapidly expanding luxury goods sector.
Greenoaks, an investment business, is investing with Coupang.
The Telegraph newspaper revealed last month that Jose Neves, the CEO and founder of Farfetch, was in talks to take the business private.
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