Fashion resale marketplace ThredUp has sold its European operations to focus on its core U.S. domestic market.
ThredUp expanded into Europe in 2021 with the acquisition of Remix, a Bulgarian startup with operations in a handful of markets in Central and Eastern Europe. Back in May, ThredUp announced a new general manager, Florin Filote, to lead its European operations, and Filote is currently leading a management buyout for the division he leads.
Founded in 2009, ThredUp specializes in vintage clothing and accessories and has raised more than $300 million in funding ahead of its 2021 IPO. Like many startups that went public during this period, ThredUp hasn't had the best of times, with its market capitalization falling from a $1.3 billion valuation at its IPO to a low of just $60 million last month.
The company confirmed in its second quarter 2024 financial results in August that it was considering selling Remix to fully focus on the United States. The reason for this appears to be that sales in Europe were down 18% from the previous year to $13 million. Gross profit decreased 25% to $3.6 million.
During its third-quarter earnings call last month, ThreadUp announced it had entered into a non-binding acquisition agreement with Remix management, building on broad momentum that saw better-than-expected third-quarter earnings and guidance. The stock price has since soared to nearly $200 million. .
Today, in a filing with the Securities and Exchange Commission (SEC), ThredUp confirmed some of the details of the transaction, stating that Filote will own just 1 for 91% of the common stock in a new entity called Remix US Holdings. I clarified that I paid EUR (1 euro). ThredUp also said it had made a “final cash investment” of $2 million in Remix to get it through its initial period as an independent entity.
Although the purchase price may seem low, there is a catch. In addition to ThredUp's 9% stake, Remix issued ThredUp a convertible promissory note worth 61.6 million euros ($64.7 million) plus interest, which is the first time ThredUp has owned Remix since its acquisition three years ago. This corresponds to the investment made in
In other words, there is a large debt element involved here as well. This amount will be repayable in 2034 or earlier upon a liquidity event such as an acquisition, IPO or other third-party investment.
“This is a mutually beneficial outcome for both ThredUp and Remix,” ThredUp co-founder and CEO James Reinhart said in a statement. “We are confident that Remix will succeed under Florin Filote's leadership and team's expertise. This transaction will allow ThredUp to focus on its core business in the U.S. and continue to innovate and evolve in the market.”