Naver to acquire Poshmark for $1.2bn

December 2022 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

December 2022 Issue

South Korean e-commerce company Naver Corp has announced it will acquire US fashion re-seller Poshmark Inc in a deal worth $1.2bn.

Under the terms of the deal, Naver will acquire all of the issued and outstanding shares of Poshmark for $17.90 in cash, representing an enterprise value of approximately $1.2bn. The agreed price represents a premium of 15 percent to Poshmark’s closing stock price as of 3 October 2022, the day the deal was announced, a 34 percent premium to the 30-day volume weighted average price, and a 48 percent premium to the 90-day volume weighted average price of Poshmark’s shares.

The deal is expected to close by Q1 2023, subject to approval by Poshmark stockholders and the satisfaction of certain other customary closing conditions. Upon completion, Poshmark will become a standalone subsidiary of Naver led by Manish Chandra, the company’s current chief executive, and its existing management team. The company will maintain its staff, user base and headquarters in Redwood City, California.

“The opportunity to join forces with Naver – one of the world’s leading and most innovative and successful internet companies – is a testament to the strength of our brand, operating model, and what we’ve built over the last decade with our talented team and amazing community,” said Mr Chandra. “Our industry continues to evolve at a rapid pace, and we are excited to continue to lead the future of shopping by providing our community with an unparalleled experience that is simple, social, fun and sustainable.”

Naver hopes that the acquisition could grow Poshmark’s annual revenue “beyond” 20 percent and save the company $30m in annual run rate within two years. Naver expects the ‘re-commerce’ industry, which is estimated at $80bn in the US, to grow by 20 percent annually to $130bn by 2025, according to Activate Consulting data cited by Naver.

“The combination will create the strongest platform for powering communities and re-fashioning commerce,” said Choi Soo-Yeon, chief executive of Naver. “Poshmark is the definitive brand for fashion in the United States that provides a social network for buying and selling apparel. Naver’s leading technology in search, AI recommendation and e-commerce tools will help power the next phase of Poshmark’s global growth. Poshmark is a natural fit for our business – our two companies share a common set of values and vision around content, community and empowerment.

“Bringing Naver and Poshmark together will immediately put us at the forefront of creating a new, socially responsible, and sustainable shopping experience designed around sellers of all sizes and interests – from individual and influencer sellers to professional sellers, brands and specialty boutiques – and a large, loyal, and highly engaged social community,” she continued. “We are excited to work closely with Manish and his talented team to create lasting value for all our stakeholders.”

“This is a highly compelling opportunity for our employees, who will benefit from being part of a larger, global organization with shared values and complementary strengths,” added Mr Chandra. “This transaction also delivers significant and immediate value to our shareholders. Longer term, as part of Naver, we will benefit from their financial resources, significant technology capabilities, and leading presence across Asia to expand our platform, elevate our product and user experiences, and enter new and large markets. I look forward to partnering with Naver as we take our company into its next phase of growth.”

Naver, which was cofounded in 1999 by Lee Hae-jin and Kim Jung-ho, both former engineers from Samsung, hosts Korea’s largest search engine, also named Naver, and messaging platform Line. In the second quarter of 2022, the group reported operating revenues of around $1.4bn, up 23 percent year-over-year. E-commerce saw a 20 percent year-on-year increase for the company, generating around 440bn won.

According to Naver, Poshmark reported a wider-than-expected quarterly loss in August, exacerbated by slower e-commerce growth, but efficient marketing spend and advertisement revenue could help the company return to profitability.

Richard Summerfield