Naver, the South Korean search giant, today announced it plans to acquire secondhand apparel marketplace Poshmark for $1.2 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 and “the satisfaction of certain other customary closing conditions.”
Assuming the transaction goes through, Poshmark will become a standalone subsidiary of Naver led by CEO Manish Chandra and Poshmark’s current management team. It’ll continue to operate under its existing brand, Naver says, and maintain its staff, user base and headquarters in Redwood City, California.
In a press release, Naver and Poshmark lay out several arguments as to why the deal makes sense for both parties. By acquiring Poshmark, Naver plans to combine the service’s growing social shopping platform, where users buy and sell used apparel, with its “technological prowess” and existing communities, like the online forum Naver Café. As for Poshmark, it stands to benefit from Naver’s image recognition and search technologies, which Naver says 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 smartphone cameras (a la Google Lens).
Naver also touts its robust ad-serving and payments infrastructure, averring that Poshmark will be able to leverage it to better analyze sales statistics and serve international customers. The long-term plan is to, with Naver’s backing, grow Poshmark’s business into additional developed markets in Asia and elsewhere where Naver has significant holdings — in part by integrating some of Naver’s live shopping services with the Poshmark platform. At the same time, Poshmark will help Naver to establish a stronger U.S. foothold inclusive of the stateside properties the tech giant already owns, like digital comics portal Webtoon Entertainment and online story platform Wattpad.
Naver optimistically predicts the acquisition could grow Poshmark’s annual revenue “beyond” 20% and save the company $30 million in annual run rate within two years.
Poshmark CEO Manish Chandra said in a press release:
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.
Naver CEO Choi Soo-Yeon said:
The combination will create the strongest platform for powering communities and re-fashioning commerce. 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. We are excited to work closely with Manish and his talented team to create lasting value for all our stakeholders.
Poshmark’s exit comes over a decade after its founding in 2011. Chandra — alongside Tracy Sun, Gautam Golwala and Chetan Pungaliya — started the company in Chandra’s garage, funding it partially with the proceeds from the sales of Chandra’s previous company, social shopping startup Kaboodle, to Hearst. Prior to its listing on the Nasdaq at a valuation of over $3 billion, Poshmark raised more than $160 million in venture capital from VC firms including Temasek, Menlo Ventures, GGV Capital and Mayfield.
Poshmark claims to have over 80 million registered users. But despite that large potential customer base, the company has performed unpredictably in recent years, reporting a loss of $44.4 million for 2021 after raking in a $25.2 million profit in 2020.