Etsy, the online marketplace for handmade goods is buying Reverb, a marketplace for new, used, and vintage musical instruments, for $275 million in cash. Reverb will operate as a standalone business when the deal closes.
Reverb helps Etsy expand into a new vertical, with a company that has a similar strategy and business model. The music marketplace’s sellers are individuals, brick and mortar retailers, dealers, and high-profile artists.
“There are a number of similarities between the levers of growth for Etsy and Reverb,” said Etsy CEO Josh Silverman. “Such as improving search and discovery, making selling and buying easier, and building a global brand and user community. We have been successfully implementing these types of initiatives at Etsy for two years now, and are confident that we can similarly impact Reverb’s business.”
The transaction is expected to close in the late third quarter or the early fourth quarter of 2019, subject to Hart-Scott-Rodino review and other customary closing conditions. Etsy plans to provide information on any impact to its previously provided financial guidance following the completion of the transaction.
Reverb Founder and CEO David Kalt will continue to serve as CEO until Etsy identifies a new leader of the business. He will also remain closely involved to provide leadership and support following the closing.
Etsy hopes to put Reverb in a better position to capture addressable market opportunities and drive repeat visits.
“Our M&A strategy looks to put our capital to work in an opportunistic way — finding great businesses at the right value — and we believe Reverb is just that,” said Rachel Glaser, Etsy’s CFO. “Reverb shares our mission, has a nearly identical business model, a strong brand in a large, fragmented market, and healthy growth dynamics. We plan to run Reverb as a standalone business, sharing knowledge and best practices across key marketplace growth areas such as marketing, seller services, and international.”
On Monday afternoon Etsy stock was trading at $66.76 a share, up .91 cents, an increase of 1.38%. The stock opened at $66.28 cents with a high of $66.84 and a low of $65.92.