Farfetch shareholders come together to contest Coupang takeover

A group of Farfetch shareholders have come together to contest the proposed acquisition of the luxury e-tailer by South Korean giant Coupang, which they believe led to an untransparent sales process.

The ‘2027 Ad Hoc Group’ is composed of institutional investors that hold over 50 percent of Farfetch’s 3.75 percent convertible senior notes, due 2027.

In a release, the group said it had appointed Pallas Partners as legal counsel and investment bank Ducera Partners as financial advisor to “urgently evaluate options to protect its interests in the face of the value destruction that it believes will be effected should the Coupang sale go ahead”.

Concerns are particularly surrounding the reasons why Farfetch went from reporting to the market a liquidity of over 800 million dollars in August 2023, to a “distressed sale” four months later.

Lack of transparency and inability to secure a more viable alternative

It was further highlighted by the group that analysts had estimated Farfetch’s enterprise value to be in excess of three billion dollars, leading to speculation regarding the “unexplained deterioration in the financial position” of the company during this time.

In addition to this, the group also claimed that the terms of the transaction between Coupang and Farfetch made it unviable for any other bidders to present an alternative offer.

As such, the shareholders believed that a “better value for the assets of Farfetch” could have been achieved through another route, with several bidders having been publicly identified.

They added that there had been “no transparency or governance in this process” leaving luxury retail partners “uncomfortable and considering severing ties”.

A spokesperson for the group continued: “The group believes this process sets an incredibly dangerous precedent.

“Allowing this transaction to complete fails to maximise the value of the assets of the company, at a time when at least three other credible parties were publicly reported to be interested in all or parts of the business. The group is urgently considering appropriate next steps.”