U.S.-based secondhand retailer Poshmark has inked a deal to sell itself for $1.2 billion four months after Kinesic Capital called for a large share buyback to prop up its share price.
On Monday evening, Poshmark announced an agreement to be acquired by South Korean internet giant Naver for $17.90 per share in cash, representing an enterprise value of approximately $1.2 billion. The stock surged nearly 14% Tuesday morning to trade close to the bid price.
The deal comes a little over four months after activist investor Kinesic urged Poshmark to address its plunging share price by launching a “substantial” share repurchase program.
In a Tuesday emailed statement to Insightia, Kinesic said that “while we believe Naver is paying a fair price for Poshmark,” the takeover offer could have been higher, potentially at $25 per share, had the company repurchased stock.
“This situation highlights just how critical intelligent and informed capital allocation is for management teams, many of which in tech are new to the public markets having entered via IPOs and SPACs over the past two years,” said the activist.
In a June 2 letter to Poshmark, Kinesic noted that the stock was down 90% from its high reached in early 2021, leaving the business with a fully diluted market capitalization of about $900 million while carrying nearly $450 million of net cash on the balance sheet.
Kinesic Managing Member Spencer Walsh suggested Poshmark had ample room for buybacks through the open market or a modified Dutch auction tender offer, arguing such purchases would send a signal that the company’s leaders are confident in “the long-term margin potential of the business.” The company’s cash reserves currently stand at about $580 million.
The Naver deal assigns the social shopping marketplace a value half of that implied by its initial public offering in early 2021. Poshmark went public in mid-January 2021 through an offering priced at $42 a share.