- M&A
- October 4, 2022
- 3 minutes read
South Korea’s Naver To Buy U.S. Fashion Marketplace Poshmark For $1.2B
Naver Corporation (KRX: 035420), the South Korean internet services giant, has ventured overseas for its latest acquisition. It’s acquiring Poshmark…
Naver Corporation (KRX: 035420), the South Korean internet services giant, has ventured overseas for its latest acquisition. It’s acquiring Poshmark (NASDAQ: POSH), a US-based online fashion marketplace.
- Naver will pay $17.90 in cash for each Poshmark share, valuing the company at $1.2bn, a 15% premium to its market value before the announcement.
Billion-dollar acquisitions typically call for celebrations, but not this time. Poshmark is selling for less than half of its 2021 public market debut price of $42 and much lower than its peak stock price of $102. This year’s market slump has dug a hole into the valuation of tech companies, mainly those without profits and relying on investors’ cash to stay afloat.
The slump in tech valuations has allowed shred buyers to make cheaper acquisitions, including companies like Naver looking to expand their turf and private equity firms buying companies and hoping to sell them for a higher price later.
- Naver Corp. operates many online services in South Korea, including the country’s number one search engine and the popular LINE messenger app.
- Poshmark is primarily a fashion marketplace serving the U.S., Canada, Australia, and India. Users can also trade home goods and electronics.
The Poshmark deal seems to have caught Naver’s investors by surprise, as the company’s shares dipped 8.8% following the announcement. Naver’s market value is now at a two-year low after plunging more than 50% this year alone.
With Poshmark, Naver can build a footing in the American online retail sector after triumphing in South Korea. Poshmark reports having 80 million users, most of whom are millennials and Generation Z, the age demographics that primarily shop online.
- Poshmark reported $326mn in revenue in 2021, compared to $261mn in the previous year. The company posted a $98mn net loss in 2021, compared to a $19mn profit the year earlier.
If all goes as planned, this deal will close in the first quarter of 2023.
