Poshmark shares open 15% up on Tuesday: explained here

0

Poshmark Inc (NASDAQ: POSH) opened nearly 15% up on Tuesday after Naver Corp (KRX: 035420) said it will buy the social commerce marketplace for $1.20 billion.

Details of the announced agreement

The $17.90 a share transaction is expected to complete by the first quarter of 2023. Both companies are convinced the merger will help them expand internationally.

Poshmark is yet to secure approval for the announced deal from its shareholders. In the press release, its Chief Executive – Manish Chandra said:

This transaction delivers significant and immediate value to our shareholders. Longer term, we’ll benefit from Naver’s financial resources, tech capabilities, and leading presence across Asia to expand and enter new large markets.

He will continue to lead Poshmark as a standalone U.S. subsidiary of Naver after the deal closes. The brand name and its employee base will remain the same as well.

Poshmark shares are now back to the price at which they started the year.

What’s in it for Naver Corp?

From 2025, the combined company is expected to see annual savings worth $30 million. It could also get to increase yearly sales by more than 20%. According to Choi Soo-Yeon – the Chief Executive of Naver:

Poshmark is a natural fit for our business. 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.

The acquisition will also help Naver expand its footprint in the United States.

The stock market news arrives more than a month after Poshmark reported weaker-than-expected earnings for its fiscal second quarter and issued not so encouraging guidance for the future.

Wall Street has a consensus “hold” rating on Poshmark shares.

The post Poshmark shares open 15% up on Tuesday: explained here appeared first on Invezz.