Poshmark to sell for less than half its IPO price to Korean Naver

South Korean internet giant Naver Corp.

035420 -8.79%

is paying $17.90 per share in cash for Poshmark, the companies said. Poshmark priced its initial public offering at $42 per share in January 2021 and shares more than doubled on day one. The stock has since slumped and closed Monday at $15.57.

The transaction values ​​Poshmark at about $1.6 billion, including about $580 million in cash reserves, Naver said. Poshmark’s peak market capitalization was $7.3 billion, reached on the day of its IPO, according to FactSet.

Poshmark looks and behaves much like Instagram, motivating sellers to give and receive comments and likes and allowing users to follow their favorite sellers. Similar to eBay Inc.,

EBAY 1.11%

sellers take photos of their own items and sell them directly. Poshmark collects fees from sales on its marketplace but does not hold any inventory.

As the Covid-19 pandemic boosted online shopping, Poshmark’s losses widened and its revenue growth slowed this year. After hitting $90.9 million in revenue in the March quarter, revenue fell slightly to $89.1 million in the June quarter and Poshmark expected it to be in the $85-87 million range. dollars for the September quarter.

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Naver is South Korea’s largest web portal and functions as a major search engine ahead of Google locally. It also offers mobile payments and online shopping. Outside of Korea, Naver is behind the messaging app Line and is a major operator of webtoons, or digital comics designed to be read on online and mobile platforms. In 2021, the South Korean company acquired Wattpad, a Toronto-based storytelling platform, for $600 million.

The companies said the Poshmark transaction is expected to close by the first quarter of 2023. The Redwood City, California-based company will become a standalone U.S. subsidiary of Naver. Poshmark Founder and Managing Director Manish Chandra and his team will continue to lead the company.

Founded in 2011, Poshmark billed itself as a way to marry sustainable commerce with social media and claims to have over 80 million registered users. The number of active buyers – people who have purchased from the site in the last 12 months – was around 8 million in the last quarter, the company reported. It faces competition from Etsy Inc.,

eBay, Thredup Inc.,

the Real Real Inc.,

Facebook Marketplace and other marketplaces that allow people to buy or sell used goods.

The companies said the combination would help Poshmark expand in Korea and other parts of Asia. Poshmark currently offers its app to users in the United States, Canada, Australia, and India. It would also give Naver a bigger presence in the US market.

Naver expects the deal to result in savings totaling about $30 million for the two companies. This includes gains from reducing redundant costs and Poshmark’s expected gains from accessing Naver’s live commerce solutions and other technologies, Naver chief financial officer Kim Nam-sun said during a conference call.

Shares of Naver fell nearly 9% on Tuesday after news of the acquisition of Poshmark.

At a press conference in Seoul, Naver CEO Choi Soo-yeon played down the stock’s plunge. The purchase was made at a very reasonable price, she said, expressing confidence that the so-called customer-to-customer market in which Poshmark operates would continue to grow in the years to come.

With this acquisition, Naver hopes to help Poshmark improve its marketing campaigns and pursue partnerships with the South Korean company’s own offerings. As an example, Ms. Choi cited Weverse, an online marketplace for K-pop merchandise that she jointly owns with HYBE Co., the agency behind boy group BTS.

“We will continue to pursue new projects and explore the best ways to create service synergies between the two companies,” Ms. Choi said.

Write to Jiyoung Sohn at [email protected]

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