The Investors Cite Lack of Transparency and Fears of Value Erosion in What They Claim is an Unfair Deal
An influential group of Farfetch shareholders are actively opposing the proposed acquisition of the high-end e-commerce platform by South Korean powerhouse Coupang. The group, comprising institutional investors holding over 50 percent of Farfetch’s 3.75 percent convertible senior notes maturing in 2027, has voiced concerns about what they perceive as an opaque sales process.
In an official statement, the 2027 Ad Hoc Group revealed the appointment of Pallas Partners as legal counsel and Ducera Partners as the financial advisor. Their primary objective is to swiftly assess options that safeguard their interests against potential value erosion resulting from the anticipated Coupang acquisition.
Of particular concern to the group is the abrupt shift in Farfetch’s financial landscape, marked by a reported liquidity of over $800 million in August 2023, only to undergo a downturn leading to a “distressed sale” merely four months later.
The lack of transparency in this transformation and the perceived absence of efforts to secure a more viable alternative has raised eyebrows among the shareholders. Analysts had previously estimated Farfetch’s enterprise value to exceed three billion dollars, prompting questions about the unexplained deterioration in the company’s financial position during this critical period.
Moreover, the group contends that the terms of the Coupang-Farfetch transaction effectively preclude other potential bidders from presenting alternative offers. This assertion aligns with their belief that a more favorable valuation for Farfetch’s assets could have been achieved through alternative routes, as several other interested bidders were publicly identified.
The shareholders argue that the entire process lacked transparency and governance, causing discomfort among luxury retail partners who are now contemplating severing ties with Farfetch. A spokesperson for the 2027 Ad Hoc Group expressed deep concern, stating, “The group believes this process sets an incredibly dangerous precedent.”
According to the group, allowing the Coupang acquisition to proceed would fail to maximize the value of Farfetch’s assets, especially considering at least three other credible parties publicly expressed interest in some or all parts of the business. The 2027 Ad Hoc Group is actively considering its next steps, emphasizing the urgency of the situation.
