Farfetch Noteholders Challenge Coupang Acquisition Over Growth Concerns
An ad hoc group of noteholders, representing over half of Farfetch's 2027 convertible notes, is challenging Coupang's acquisition of the luxury e-commerce platform. The group, which holds approximately $400 million in debt, fears it won't recover its funds if the sale goes through.
The group's concerns stem from Farfetch's failure to disclose a significant slowdown in growth in the U.S. and China, as alleged in a class action lawsuit filed last year. They also question the valuation of the proposed Coupang acquisition, deeming it undervalued compared to recent broker valuations.
The group has hired legal and financial advisors to evaluate its options. Paul, Weiss, Rifkind, Wharton & Garrison LLP is representing the group legally, while Ducera Partners is acting as financial advisors. Farfetch's cancellation of its Q3 earnings call in November 2023, along with the expected delisting from the NYSE and board member resignations, has further fueled the group's concerns.
The ad hoc group's challenge to the Coupang acquisition could potentially deter alternative bidders, with a $1 billion poison pill in the deal acting as a barrier. The outcome of this dispute will significantly impact Farfetch's noteholders and the future of the luxury e-commerce platform.
