Extends Poshmark’s leadership and capitalizes on changing consumer trends through new technology investments, international expansion, and category and product evolution
Naver Corp. (KRX: 035420) (“Naver”), Korea’s largest internet company, and Poshmark, Inc. (NASDAQ: POSH) (“Poshmark”), a leading social e-commerce marketplace for new and secondhand style, today announced that they have entered into a definitive agreement under which Naver will acquire all of the issued and outstanding shares of Poshmark for $17.90 in cash, representing an enterprise value of approximately $1.2 billion.1 This represents a premium of 15% to Poshmark’s closing stock price as of October 3, 2022, a 34% premium to the 30-day volume weighted average price, and a 48% premium to the 90-day volume weighted average price of Poshmark’s shares.
Management Commentary
Choi Soo-Yeon, Chief Executive Officer of Naver:
“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.”
Manish Chandra, Founder and Chief Executive Officer 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.”
Redefining Commerce and Community Around a Shared Vision
The inherent strengths of both companies lie in their unwavering commitment to content, community and empowerment:
- Content. Naver is home to the largest number of bloggers in Korea and the largest number of digital creators of stories (Wattpad) and comics (Webtoons) globally. Poshmark is a leader in creating unique styles and fashion trends, including the growing K-Fashion apparel segment.
- Community. Naver is the largest and longest-standing online community in Korea, where more than 36 million monthly users access its search portal and various online community services. Its metaverse platform, Zepeto, is the second largest metaverse app in the world, with a growing, vibrant community for members to create and share whatever they imagine. Naver’s community also extends to other large, fast-growing, and highly engaged groups, including its K-Pop fandom community Weverse, which is jointly owned with BTS’ management company, one of the most successful groups of all time. Poshmark is the destination of choice for more than 80 million registered users. Among them, active users spend approximately 25 minutes of their day buying and selling apparel online, and gather in-person at Posh Party Live events held in various cities around the world.
- Empowerment. Naver is dedicated to empowering the long tail – it is the largest enabler of e-commerce for small and medium-sized businesses in Korea and has revolutionized content creation by democratizing the publication of digital comics through Naver Webtoons. At Poshmark, anyone can easily list and sell what is hanging in their closet at home, and anyone can make a social impact through the promotion of socially responsible, sustainable commerce.
The transaction will create a global player in online fashion re-commerce by combining Poshmark’s unique discovery-based social shopping platform and deeply engaged community with Naver’s technological prowess in upleveling the e-commerce experience. Poshmark will also leverage Naver’s proven expertise and track record in Asia and its significant expertise from backing and investing in other fashion and consumer-to-consumer (C2C) e-commerce platforms globally.
The combination accelerates Naver’s strategy to build a global e-commerce community portfolio to capture the growth in large markets around the world, including Poshmark’s home market of North America. Together, the companies expect to increase purchase conversion rates, deepen user engagement, create an industry leader in livestreaming commerce, and enhance the unique relationship- and discovery-based experiences that are driving fast-growing re-commerce verticals.
Strategic and Financial Benefits
- Expands Long-Term Opportunity in Fashion Re-commerce and Creates Globally Distributed User Base with Influx of Younger Users: The addition of Poshmark will expand and diversify Naver’s search-driven e-commerce business into the global secondhand C2C market for fashion. The combination will also allow Naver to capitalize on the increasing consumer shift in fashion to online re-commerce, which is an $80 billion market today in the U.S. alone, and is expected to grow by 20% annually to $130 billion by 2025.2
Poshmark currently has a community of over 80 million registered users, across 90% of zip codes in the U.S. In 2021, the company generated approximately $2 billion in gross merchandise value (GMV) with a take rate of 20% and gross margin of 85%. Its primary demographic of millennials and Generation Z users is the largest shopping demographic for secondhand goods and a key driver of the circular economy and community-based platforms. One of Poshmark’s strong appeals to the growing number of conscious consumption shoppers is the important role it plays in extending the lifecycle of millions of previously made items and reducing fashion’s footprint. These users will expand and complement Naver’s current user base. - Creates a Global Commerce Community with Access to Poshmark’s Social Networking and Discovery-Based Shopping: Naver is a proven community builder, connecting more than 28 million monthly users across its Naver Café platform – an open social community where users create their own groups to share content, ideas, and information broadly, across a large number of topics and categories – as well as its Metaverse and K-Pop fandom communities. Poshmark has created unique relationship-oriented “micro” communities that are based around social engagement with friends and family and discovery-based shopping. Poshmark’s simple, easy, and community-centered fashion marketplace will give Naver access to a highly engaged and diversified community, where sellers become buyers and buyers become sellers, and add a global social networking element to Naver’s portfolio of services.
- Enhances Poshmark’s User Experience with Naver’s Unrivaled and Innovative Technology Offerings: Poshmark will instantly benefit from Naver’s deep technology stack and AI-based capabilities, including its smart lens image recognition and search technologies. These capabilities are highly complementary to Poshmark’s product development strategy, and together will allow Poshmark to offer a new search and shopping experience by integrating Naver’s shopping search engine, which allows users to enter additional search keywords according to their preference on colors, designs, and materials. Specifically, with access to Naver’s image recognition technology, Poshmark users will be able to identify where to find and buy products by scanning objects and shopping through the camera on their phones without needing to know the exact name of the product. This capability will make it easier to both identify new products and sell items, enhancing the user experience.
- Leverages Naver’s Proven Data Analytics Technology to Improve Marketing and Engagement Strategies to Make Poshmark the Platform of Choice for Buyers and Sellers: As the largest advertising platform in Korea, Naver’s ad-serving infrastructure will play an instrumental role as Poshmark explores rolling out ads to its deeply engaged community. For instance, Poshmark will be able to leverage Naver’s “Biz Advisor” and “Analytics” AI analytical tools, which analyze sales statistics to manage data more effectively, and in turn, increase the number of sellers on Poshmark’s platform. These enhancements will dramatically advance Poshmark’s service offering, resulting in greater customer acquisition, retention, and buyer conversion, as well as enhance its community engagement and user experiences. With Naver Pay commanding the largest share of online payment processing in Korea, the combination will also enable Poshmark to develop innovative payment solutions to expand its ecosystem of buyers and sellers. Additionally, with Naver’s technologies, Poshmark will be able to provide more suitable product recommendations for customers after analyzing products, user communities, and the closets of the users’ favorite sellers in real-time. Together, the companies can develop a service that allows users to search with shopping keywords so that the most suitable product will be recommended to the right user.
- Enables Global Live Commerce Adoption: Livestream shopping is a key driver of e-commerce in China and Korea (and increasingly in the U.S.) today, allowing shoppers to buy products in real-time through live video broadcasts, enabling greater insights and more clarity around purchasing decisions. Naver’s Shopping Live solution is the leader in Korea, one of the world’s largest live shopping markets, and an essential feature of Naver’s e-commerce platform with over $25 billion in GMV transacted in 2021. Naver expects that the enablement and enhancement of live streaming capabilities within the Poshmark platform will transform the shopping and selling experience and strengthen Poshmark’s community by allowing for greater social networking and engagement.
- Further Expands Global Footprint for Both Naver and Poshmark: Poshmark will benefit from Naver’s global presence in high-growth markets, particularly in Korea, one of the world’s most innovative and highest penetrated e-commerce industries. This is where Naver is the leading search engine and largest e-commerce channel, and the only search technology company in the world that has successfully expanded into an e-commerce platform. Naver’s footprint also includes Japan, where it has joint ownership in Z Holdings, one of the world’s largest internet service groups, with assets such as Yahoo! Japan and Japan’s leading smartphone messaging platform, LINE, which Naver created and launched in 2011 and now operates in over 230 countries and is used by more than 70% of those populations. With Naver’s support, Poshmark will pursue a broader international expansion strategy in the medium-term, including into other developed markets in Asia.
In addition, this transaction provides Naver with an enhanced foothold in the U.S., expanding its international profile, which it has steadily increased both organically and through investments over the past 20 years. Naver will build on its existing U.S. footprint, including Webtoon Entertainment, which is based in Los Angeles and extremely popular with younger audiences, and its $600 million acquisition of Wattpad in 2021. Naver has benefited from the recent global digital disruption and transformation of media and publishing through Wattpad and Webtoon Entertainment, and looks to extend their growth in the region with the addition of Poshmark. - Significant Synergy Potential: The transaction is expected to generate significant revenue and cost synergies, consisting primarily of:
- Re-acceleration of annual revenue growth beyond 20% in the near-term by leveraging Naver’s advertising capabilities to drive further monetization, accelerating investment to drive growth overseas, and expanding live commerce adoption.
- Approximately $30 million in run-rate annual cost savings within 24 months post-closing including through rationalization of public company costs and driving of higher operating leverage across operating and other cost functions.
Operating Structure and Leadership
Upon completion of the transaction, Poshmark will become a standalone U.S. subsidiary of Naver and will continue to be led by CEO Manish Chandra and Poshmark’s current management team.
Poshmark will continue to operate under its existing brand, as well as maintain its employee base, Poshmark community, and headquarters in Redwood City, California.
Transaction Details
The transaction, which was unanimously approved by both Naver’s and Poshmark’s Boards of Directors, is expected to close by the first quarter of 2023, subject to approval by Poshmark stockholders and the satisfaction of certain other customary closing conditions. The transaction is not contingent on any financing.
Naver has secured voting and support agreements with certain stockholders of Poshmark, representing approximately 77% of the outstanding voting power of Poshmark common shares.
The transaction is expected to be funded with Naver’s cash balances and other existing financing sources.
Conference Call / Webcast Information
Naver and Poshmark will host a conference call for investors and media at 10:00am Korea Standard Time today (9:00pm Eastern Time / 6:00pm Pacific Time) to discuss the announcement.
Pre-registration is required to join the conference call and can be accessed using the following links: Korean: http://pin.teletogether.com / English: http://pin.teletogether.com/eng and log-in passcode 385074.
A webcast of the call can be accessed using the following links Korean: https://irsvc.teletogether.com/naver/naver20221004_kor.php / English: https://irsvc.teletogether.com/naver/naver20221004_eng.php or by dialing 031 810 3141 for domestic calls and +82 31 810 3142 for international calls using the passcode 385074# + your personal access number.
Advisors
LionTree LLC is serving as Naver’s exclusive financial advisor and Kirkland & Ellis LLP is serving as Naver’s legal counsel. Goldman Sachs & Co. LLC is serving as exclusive financial advisor to Poshmark, and Goodwin Procter LLP is serving as Poshmark’s legal counsel.
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