Is José Neves ready to make his move?
Shares of the beleaguered Farfetch jumped 22.8 percent to $2.10 on Tuesday following a report in The Telegraph that Neves — the luxe platform’s founder, chairman and chief executive officer — was working with J.P. Morgan to try to take the luxury platform private.
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In an unusual move, Farfetch canceled its third-quarter financial update for Wednesday and said: “The company expects to provide a market update in due course.”
Farfetch also said it “will not be providing any forecasts or guidance at this time, and any prior forecasts or guidance should no longer be relied upon.”
Neves is said to have the “tentative backing” of some of Farfetch’s key partners, including Alibaba and Compagnie Financière Richemont, according to the report.
Farfetch and J.P. Morgan declined to comment.
Tom Nikic, an analyst at Wedbush, said, “We would not be surprised if Mr. Neves truly does want to take the company out of the public-market spotlight.”
Nikic noted that Neves controls more than 75 percent of the company’s voting rights and also pointed out the stock’s more than 70 percent decline over the past year and the fact it has “a lot of balls in the air,” especially a deal with Richemont to take on Yoox Net-a-porter.
That Net-a-porter transaction, which was approved by the European Commission last month, is a complicated bit of dealmaking that has Richemont potentially getting paid in Farfetch shares, which traded at nearly $10 when the deal was cut, with dilution topping out at about 15 percent.
“Thus, there seems to be a problem: either Richemont has to accept payment in assets that have a drastically lower value, or Farfetch has to accept a change to the terms of the deal and accept a greater amount of dilution,” Nikic said. “Taking the company private could be a way to settle the deal in a compromise that works for both parties.”
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