South Korea’s largest internet company Naver Corp has inked a deal to acquire Poshmark, Inc., a United States-listed social e-commerce marketplace for new and secondhand style, for approximately $1.2 billion.

Both parties said in a statement 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.

This represents a premium of 15 percent to Poshmark’s closing stock price as of October 3, 2022, a 34 percent premium to the 30-day volume weighted average price, and a 48 percent premium to the 90-day volume weighted average price of Poshmark’s shares.

Naver Chief Executive Officer 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, artificial intelligence (AI) recommendation and e-commerce tools will help power the next phase of Poshmark’s global growth,” he said.

He also said Poshmark is a natural fit for the group’s business, and 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,” he said.

Poshmark Founder and Chief Executive Officer Manish Chandra said 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 the group’s brand, operating model, and what it has built over the last decade with its team and 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,” he said.

“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,” he added.

According to the statement, 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.

Poshmark currently has a community of over 80 million registered users, across 90 percent 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 percent and gross margin of 85 percent.

The transaction is expected to generate significant revenue and cost synergies, consisting primarily of re-acceleration of annual revenue growth beyond 20 percent 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.

It will also see 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.

Upon completion of the transaction, Poshmark will become a standalone U.S. subsidiary of Naver and will continue to be led by 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.

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.

Naver has secured voting and support agreements with certain stockholders of Poshmark, representing approximately 77 percent 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.

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