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ThredUp has officially agreed to divest its European business, Remix, in an effort to focus on its business in the U.S., the company announced Tuesday.
During its Q2 earnings call in August, CEO James Reinhart noted that the company had European divestment on its roadmap. By the time the company’s Q3 earnings call came along in November, the company said it had made a non-binding agreement to offload Remix. Now, the transaction has been made official.
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In its filing with the U.S. Securities and Exchange Commission (SEC) disclosing the details of the deal, the company noted that Florin Filote, ThredUp’s general manager of Europe, is leading the charge on the management buyout.
According to ThredUp’s Dec. 3 Form 8-K filing, Filote paid €1 ($1.05) for 8,100,000 shares of Remix US Holdings, a new entity formed by the transaction. That accounts for 91 percent of the company’s total shares. ThredUp will keep a minority stake in Remix, holding the remaining 9 percent of the company’s shares and has pumped a final investment of $2 million into Remix, which, according to a company release will serve to “help fund operations as Remix continues its fundraising process independently.”
Remix has issued the resale company a promissory note worth nearly €61.6 million ($64.9 million), plus interest. That sum “reflects [ThredUp’s] investment in Remix since its acquisition to build distribution center infrastructure, enhance the technology platform, hire personnel, engage customers” and more.
But it’s not as if ThredUp can cash in on that note today; according to the 8-K filing, Remix will be required to pay out the sum in November 2034, or earlier, if it ends up being acquired, filing for an IPO or accepting a third-party investment from a firm that has “the intention to gain long-term strategic benefits” from the transaction.
ThredUp acquired Remix in 2021 for $28.5 million. At the time, the company had high hopes for the European resale market. Ultimately, Reinhart said, it’s offloading as a chance to look back to home base: the United States.
“This is a mutually beneficial outcome for both ThredUp and Remix,” he said in a statement. “We are confident that Remix will thrive under Florin Filote’s leadership and the team’s expertise. This transaction will allow ThredUp to focus on our core U.S. business and continue to innovate and evolve our marketplace.”