- Etsy on Monday announced a definitive agreement to acquire musical instrument marketplace Reverb Holdings for $275 million in cash.
- The startup, founded in Chicago six years ago, sells new, used and vintage gear and "will operate as a standalone business when the deal closes," according to a press release from the companies. Reverb founder David Kalt will step down as CEO once a new chief is found, the companies said.
- Etsy and Reverb indicated they expect the transaction to close late in the third quarter or early in the fourth quarter of this year, subject to Hart-Scott-Rodino antitrust review and other customary closing conditions, according to the release.
Overshadowed by marketplace giants Amazon and eBay, Etsy appears to be gaining some traction in recent months.
The site is dominated by artisans and purveyors of vintage finds, and transactions on the site last year grew 20% year-over-year, with its conversion rate "surging 15%," according to a June e-commerce report from Jumpshot that was emailed to Retail Dive. Etsy — like Chewy and Wayfair — has carved out a specialty niche in its effort to differentiate itself, especially against Amazon, according to that report. In fact, Etsy had a more lucrative Prime Day this year than last, with transactions up 21.5%, Jumpshot told Retail Dive in a separate email last week.
The acquisition of Reverb is designed to further that momentum thanks to key synergies, even though the plan is to keep operations separate, Etsy CFO Rachel Glaser suggested in a statement. "As we have said, 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," she said. "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."
Reverb not only hosts sales of music gear, but also provides content like tips and how-tos for musicians of various abilities and interviews with musicians and others. In a blog post Monday, Kalt noted that the company has already had "a friendly relationship with Etsy for a number of years" and that the deal represents a way for it to thrive and expand.
"Reverb has always found inspiration in Etsy," he wrote. "Etsy forged a path and gave me the confidence to start Reverb when I saw the need for a musician’s marketplace six years ago."