Naver to buy second-hand fashion marketplace Poshmark for $1.2 billion

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Naver to buy second-hand fashion marketplace Poshmark for $1.2 billion

The companies announced yesterday that Naver Corp., a South Korean internet giant, has agreed to buy online second-hand fashion marketplace Poshmark Inc. in a deal worth about $1.2 billion.

Naver will buy all of Poshmark's shares for $17.90 each, a 15% premium over Monday's closing price of $15.57. The trading of Poshmark shares, which fell 0.6% on Monday, was stopped on the news. After the deal is completed, Poshmark would become a standalone US subsidiary of Naver, and would continue to be led by Chief Executive Officer Manish Chandra and his management team.

Naver shares fell by 7% in Seoul Tuesday after the announcement, its biggest intraday drop in over a year.

The market was surprised at the size of the deal, according to Naver Chief Executive Officer Choi Soo-Yeon, who said this is the company's biggest acquisition to date and the first foray into Silicon Valley. We're going to explain to investors how we can maximize synergy by strengthening the combination of commerce businesses and communities. With the transaction, Poshmark, which has tried to expand internationally even though its stock has declined over the past year and half, will get access to Naver's extensive e-commerce experience. Naver has a US brand that has grown rapidly in the past few years.

Naver is one of the leading internet players in South Korea, combining search services with games and online marketing. The goal of the Poshmark deal is to create a global player in online fashion by using the target's social shopping technology.

Poshmark will become a foothold in North America in order to expand our business in the region, Choi said. We will try out our technology through Poshmark's services, popular among the younger generation. Poshmark has a community of more than 80 million registered users, with 90% of the zip codes in the US, according to the companies.

The deal is expected to close by the first quarter of 2023, according to the statement.

Chandra founded Poshmark in 2011 and allows users to post photos of items they are selling and set their own prices, and then ship goods once they are purchased. The company, which doesn't hold any inventory, gets paid when users make a sale.

The closing price of Poshmark is barely a third of that in its January 2021 initial public offering, in which it raised $319 million, including so-called greenshoe shares. The company had a market value of more than $7 billion when the shares rose by 142% from their $42 offer price in the first day of trading to $101.50.

Share drops have been noticed on other online resellers since they went public. RealReal Inc.'s shares are down 93% from its 2019 IPO, while ThredUp Inc., which went public two months after Poshmark, has fallen 87%.

LionTree Partners is working as Naver's financial adviser, while Kirkland Ellis is acting as Naver's legal counsel. Goldman Sachs Group Inc. is serving as financial adviser to Poshmark, and Goodwin Procter is legal counsel.

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