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Richemont, a leading Swiss luxury goods conglomerate led by South Africa’s richest man Johann Rupert, has disclosed that it has no plans to invest in the online luxury retailer Farfetch, amid a report that the London-based loss-making e-commerce company was considering going private.
Richemont’s decision comes on the heels of receiving an unconditional antitrust clearance from the European Commission (EC) for a partnership with Farfetch — this partnership involves Farfetch acquiring a 47.5-percent stake in Yoox Net-a-Porter (YNAP).
Farfetch founder, Jose Neves, eyes privatization amidst market challenges
Farfetch’s founder, Jose Neves, is actively exploring options for taking the e-commerce company private — he is reportedly collaborating with advisers at JP Morgan to navigate the delisting process.
The recent move comes against the backdrop of a 95.5 percent plunge in Farfetch’s share price since its listing on the New York Stock Exchange on Sept. 21, 2018. As of Friday, Dec. 1, the share price closed at $1.28, pushing Farfetch’s market cap below $500 million.
Richemont’s position on Farfetch
Richemont in reaction to the recent development disclosed that it is “carefully monitoring the situation.” The deal, announced in Aug. 2022, involves Richemont receiving an initial 58.5 million Farfetch shares.
Despite the market challenges faced by Farfetch, Richemont clarified in a statement, “it has no financial obligations towards Farfetch” it also noted that it does not envisage lending or investing in the loss-making online luxury retailer.
Farfetch’s financial woes raise concerns over Richemont’s YNAP stake sale
Last year, Rupert’s Richemont agreed to sell a 47.5-percent stake in its Yoox Net-A-Porter (YNAP) fashion and accessories business to Farfetch — the deal included an option for Farfetch to acquire the remaining stake.
However, the recent financial struggles at Farfetch have cast doubts on the viability of the deal, even though it received clearance from European authorities.
Richemont’s decision not to further invest in Farfetch underscores the challenges faced by the conglomerate in navigating the murky waters of the e-commerce landscape. As the situation unfolds, stakeholders closely watch for developments in Farfetch’s decision to go private and its impact on the luxury retail industry.
