Naver to buy Poshmark in Us$1.2bil deal

South Korean Internet giant gains US foothold

SEOUL: South Korean Internet giant Naver Corp will buy online second-hand fashion marketplace Poshmark Inc for Us$1.2bil (Rm5.57bil).

Naver will pay US$17.90 (RM83.2) per share, a 15% premium on Monday’s closing price of US$15.57 (RM72), the companies announced in a statement.

Trading in Poshmark shares, which fell 0.6% on Monday, was halted on the news.

After the deal is completed, Poshmark will become a standalone United States subsidiary of Naver and will continue to be led by chief executive officer Manish Chandra and his management team.

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

“I think the market was surprised at the size of the deal,” Naver chief executive officer Choi Soo-yeon said in an interview, noting that this is the company’s biggest acquisition to date and its first foray into Silicon Valley.

“We will explain to investors how we can maximise synergy through strengthening the combination of commerce, businesses and communities.”

With the transaction, Poshmark, which has sought to expand internationally even as its stock steadily declined over the past 18 months, will get access to Naver’s extensive ecommerce experience.

Naver obtains a US brand that has grown rapidly in recent years.

Naver is one of the leading Internet players in South Korea, combining search services with games and online marketing.

The Poshmark deal is aimed at creating a global player in online fashion using the target’s social shopping technology.

“Poshmark will get a foothold in the North American market 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 across 90% of zip codes in the US, the companies said.

The boards of both companies have approved the deal, which is expected to close by the first quarter of 2023, said the statement.

Poshmark, which Chandra founded in 2011, is an online marketplace where users post photos of items they are selling and set their own prices, then ship goods once they are purchased.

The company, which doesn’t hold any inventory, gets paid when users make a sale.

Poshmark’s closing price on Monday is barely a third of that in its January 2021 initial public offering (IPO), in which it raised Us$319mil (Rm1.48bil), including so-called greenshoe shares.

The shares soared 142% from their US$42 (RM195) offer price on their first day of trading to US$101.50 (RM472), briefly giving the company a market value of more than Us$7bil (Rm33bil).