A group of Farfetch shareholders have come together to challenge the planned takeover of the online luxury retailer by the South Korean group Coupang. They believe that the sales process was not transparent.
The “2027 Ad Hoc Group” consists of institutional investors who hold more than 50 percent of Farfetch’s 3.75 percent senior notes due 2027.
In a statement, the group said it had appointed Pallas Partners as legal adviser and investment bank Ducera Partners as financial adviser to “urgently explore options to protect its interests in the face of the destruction of value that it believes would occur in the event of a sale of Coupang would occur”.
Of particular concern are the reasons that led Farfetch to report over $800 million in liquidity to the market in August 2023 and to conduct a “fire sale” four months later.
Lack of transparency and the inability to find a more viable alternative
The group also noted that analysts had estimated Farfetch’s enterprise value at over $3 billion, leading to speculation about the company’s “unexplained deterioration in financial condition” during this time.
In addition, the group claimed that the terms of the transaction between Coupang and Farfetch made it unviable for other bidders to submit an alternative offer.
Shareholders therefore believed that a “better price for Farfetch’s assets” could have been achieved through other means, with several bidders having been publicly named.
They added that there was “no transparency or control in this process,” leaving luxury retail partners “feeling uncomfortable and considering severing ties.”
“The group believes this trial sets an incredibly dangerous precedent,” a spokeswoman for the group continued. “Allowing this transaction will not maximize the market value of the company’s assets, at a time when at least three other credible interested parties in all or part of the company have been publicly named. The group is urgently considering appropriate next steps.”
This article originally appeared on FashionUnited.uk.