M & A News: Coupang’s Farfetch Leap Sparks Investor Ire
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M & A News: Coupang’s Farfetch Leap Sparks Investor Ire

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Coupang has completed the acquisition of Farfetch’s assets. However, FTCHA’s debt holders are gearing up for a potential showdown.

eCommerce major Coupang (NYSE:CPNG) has completed the acquisition of Farfetch’s (OTC:FTCHF) assets. Coupang agreed to acquire Farfetch’s business and assets in December, extending a $500 million bridge loan lifeline to the British luxury fashion platform. The deal allowed Farfetch to keep its door open and cater to its over four million global customers. Still, this M & A move has failed to stop the steady decline in Coupang’s share price. The stock is now down nearly 23% over the past six months.

The acquisition is expected to make Coupang a leading name in the global personal luxury goods market by combining Coupang’s operational and logistics scale with Farfetch’s luxury market expertise. The acquisition could also help Coupang make inroads into the South Korean luxury goods market.

While the acquisition handed Coupang control over Farfetch’s marketplace and platform, the latter’s equity investors and debt holders may have received a less favorable outcome. According to a recent exchange filing, Farfetch expects that the “Holders of its Class A and B ordinary shares and its convertible notes will not recover any of their outstanding investments in Farfetch.”

However, a group of investors holding over half of Farfetch’s convertible debt is demanding that the company settle all of its debts. The group, called the 2027 Ad Hoc Group, has roped in advisors to explore options, including potential litigation.

For Coupang, the acquisition could act as a stepping stone toward its global ambitions. Separately, Coupang is scheduled to report its fourth-quarter results on February 27. Analysts expect the company to post an EPS of $0.06 on revenue of $6.37 billion for the quarter. The results could also provide further insights into the company’s strategy after the Farfetch deal.

What Is the Target Price for CPNG?

Overall, the Street has a Hold consensus rating on Coupang, and the average CPNG price target of $18.59 implies a 33.6% potential upside in the stock.

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