Following South Korean online platform Naver’s announcement of its intention to acquire second-hand clothing marketplace Poshmark, two law firms have come forward to investigate whether the two companies are acting in the best interests of their shareholders.
Earlier this week, Naver announced that it had signed an agreement with resale platform Poshmark to purchase all of the shares for $17.90 in cash, equivalent to an enterprise value of about $1.2 billion.
The deal is worth about $1.6 billion when Poshmark’s cash holdings are included, according to Naver. It should be completed by the first quarter of 2023, the companies said.
However, US law firms Weiss Law and Ademi LLP have been engaged to investigate possible breaches of fiduciary duty and other violations of law by Poshmark’s board of directors.
In filing her lawsuit, Weiss Law stated that the firm will investigate whether Poshmark’s board of directors acted in the best interests of the company’s shareholders in the contemplated transaction and whether the proposed $17.90 per share adequately compensates them.
In addition, the company will also check whether all information about the sales process and the valuation of the transaction is fully and fairly disclosed.
Insufficient offer for shareholders
Law firm Ademi LLP will also look into similar concerns, claiming in its filing that the agreed deal may not be enough as Poshmark’s financial prospects and prospects appear excellent.
“The Transaction Agreement unduly constrains competing bids for Poshmark by providing for a substantial penalty if Poshmark accepts a better bid. Poshmark Insiders will receive significant benefits under the change of control agreements.
Ademi will investigate the conduct of Poshmark’s board of directors to determine whether they are fulfilling their fiduciary duties and getting a fair price for the platform.
In announcing the acquisition, the duo stated that by combining Poshmark’s platform with Naver’s technological capabilities, the combination aims to help create a global player in online fashion e-commerce.
The social commerce marketplace will leverage Naver’s track record in Asia, with the Korean web portal also eyeing potential international growth, including in Poshmark’s North American base.
“The combination of Naver and Poshmark will immediately place us at the forefront of creating a new, socially responsible and sustainable shopping experience that caters to sellers of all sizes and interests,” said Naver CEO Choi Soo-yeon in announcing the Deals explained a few days ago.
The acquisition will also allow Naver to capitalize on the increasing shift in consumer interest in the fashion industry towards online recommerce that has been unleashed during the pandemic.
This article originally appeared on FashionUnited.uk. Translated and edited by Simone Preuss.