Coupang’s takeover bid for Farfetch sparked discontent among its institutional investors, leading to the formation of the Ad Hoc 2027 Group. This group is concerned about Farfetch’s worsening financial situation and is now evaluating its remaining alternatives.
A new episode in the Farfetch series. Following the proposed acquisition by South Korean e-commerce giant Coupang, major investors in the online fashion platform, such as Fir Tree, have expressed their dissatisfaction. They recently formed under the name Groupe Ad Hoc 2027, to quickly explore alternative options.
On January 26, the group issued a statement revealing that it had appointed Pallas Partners as legal advisor, and Ducera Partners, an investment banking institution, to act as financial advisors. The purpose of this appointment is to rapidly assess alternatives for safeguarding its interests against the loss of value it considers inevitable should the sale to Coupang go ahead.
Holding over 50% of Farfetch’s $1 trillion 3.75% senior convertible bonds due 2027, Ad Hoc 2027 is concerned that the deal will reduce the interest on these bonds to zero.
The group expresses deep concern about the rapid and inexplicable deterioration of Farfetch’s financial situation between August and December 2023. The online fashion platform went from a liquidity position in excess of $800 million in August 2023 to a distressed sale just four months later. When the deal was announced, the consensus of analysts, including broker JPMorgan, valued Farfetch at over $3 billion.
Controversial takeover
Coupang’s proposed acquisition, announced in December 2023, caused Farfetch shares to plunge 38% in the pre-market opening, reaching historically low levels.
Listed on the New York Stock Exchange, Coupang is one of the world’s leading e-commerce companies. It has developed food delivery, video streaming and payment services in Asia (South Korea, Taiwan, Singapore, China and India).
Sometimes referred to as the “Amazon of Asia”, the company planned to acquire luxury marketplace Farfetch and provide $500 million in emergency financing.
Investor opposition
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Featured photo : ©Farfetch
