Naver, the South Korean search giant, plans to acquire Poshmark for over $1 billion in cash. The deal values publicly-traded Poshmark's shares at $17.90, a 15% premium over today's closing price, and the companies expect it to close by Q1 2023, subject to approval by Poshmark stockholders.
Poshmark will become a subsidiary of Naver under the leadership of CEO Manish Chandra. Naver says it will keep its staff, user base and headquarters in California.
There are several reasons why the deal makes sense for both parties. Naver plans to combine the service's growing social shopping platform with its "technological prowess" and existing communities, like the online forum Naver Café. Naver says that it will allow the shopping platform to offer new discovery and recommendation experiences that let users find apparel by searching colors, designs and materials and identify where to find products by scanning clothes using their phone.
Naver says that Poshmark will be able to use it to better analyze sales statistics and serve international customers. The long-term plan is to grow Poshmark into additional developed markets in Asia and elsewhere where Naver has significant holdings. Naver will be aided in establishing a stronger U.S. foothold by the help of Poshmark.
Naver thinks the acquisition could save the company $30 million in two years and grow its revenue by 20%. The market for online re-commerce is estimated to be $80 billion in the U.S. alone and is expected to grow by 20% annually to $130 billion by the year 2025.
A press release was issued by the CEO of Poshmark.
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. 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. 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. 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.
The CEO of Naver said the same thing.
The combination will create the strongest platform for powering communities and re-fashioning commerce. Poshmark is the definitive brand for fashion in the U.S. 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. We are excited to work closely with Manish and his talented team to create lasting value for all our stakeholders.
Over a decade after it was founded, Poshmark is leaving. The company was started in Chandra's garage with the help of proceeds from the sale of Chandra's previous company, Kaboodle, to Hearst. Users pay a fee when they make a sale on the site.
Poshmark raised more than $150 million in venture capital prior to its listing on the Nasdaq at a valuation of over $3 billion.
The company claims to have over 80 million users. Despite that large potential customer base, the company has performed unpredictably in recent years, posting a loss of $44.4 million for 2021.
Recent consolidation and turbulence in the secondhand clothing space are added to by the acquisition. Depop had a valuation of $1.62 billion last year. ThredUp, which went public two months after Poshmark, has plummeted in value.
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