South Korean tech giant Naver
Naver is the top search engine in South Korea, and it's also known for its suite of mobile apps and online tools, like email, news aggregation, messaging, and online shopping. The company already has a foothold in the resale market in Asia.
According to Naver CFO Namsun Kim, the two companies began talks six months ago. Initially, Naver was planning to share Poshmark's live commerce feature, but a merger eventually entered the conversation.
"It eventually made sense to think of something grander," Kim told Axios.
While Naver's $17.90 per share acquisition offer is a 15% premium on the retailer's current stock value, it's significantly lower than Poshmark's IPO price of $42 per share in early 2021.
After the merger is completed, Poshmark will still be led by CEO Manish Chandra. The platform plans to introduce image recognition tools and live streaming to its site, a driving force behind online shopping in South Korea. The two companies also hope to capitalize on young users' interest in environmentally friendly commerce, like second-hand shopping.
"The online market changes so quickly, not doing anything can mean losing long-term value," Naver CEO Choi Soo-Yeon said. "We will do everything to carry out what we have promised investors two years, five years from now."
Poshmark is dominated by Millennial and Gen Z users who make up a significant portion of its 80 million registered users. The online resale company is the largest of its kind in North America. In the U.S. alone, online clothing resale is an $80 billion market, and that figure is expected to grow by 20% every year through 2025.
Poshmark shares saw a bump thanks to the merger announcement, but Naver's stock dropped 7.5% and has continued to decline. Amidst a slowing economy, this merger will be Naver's largest acquisition to date, and its investors aren't happy.
"Why now? The market is skeptical about whether this is best timing. Since COVID-19 became endemic, many platform companies have seriously lost their lustre. And the plunging won doesn't help," said eBest Investment & Securities analyst Sung Jong-hwa.
Last year, Naver spent $600 million to buy the online fan-fiction platform Wattpad. In 2017, the tech giant purchased artificial intelligence research company Xerox Research Center Europe.
