Etsy shares surge after activists urge exploring ‘strategic alternatives’

An employee walks past a quilt displaying Etsy signage at the company's headquarters in Brooklyn, New York.

Victor J. Blue | Bloomberg | Getty Images
An employee walks past a quilt displaying Etsy signage at the company’s headquarters in Brooklyn, New York.

Etsy shares are surging Tuesday after two private equity firms disclosed ownership in the online crafts site, requesting it consider strategic alternatives.

In separate filings with the Securities and Exchange Commission Monday evening, TPG Group Holdings reported a 4.3 percent stake in Etsy, while Dragoneer Investment Group said it now has 3.7 percent ownership.

Etsy’s stock surged more than 19 percent Tuesday on this news.

Both firms are saying they’ve asked Etsy “to engage in discussions regarding strategic alternatives.”

In response to the filings, Etsy Chairman Fred Wilson said in a statement the company’s board will “carefully consider all options to enhance shareholder value.”

Etsy CEO Josh Silverman wrote: “We are now reviewing our strategic and operational plans to ensure Etsy is focused on the most value-enhancing near- and long-term opportunities. We will prudently invest in areas that will deliver the greatest returns. At the same time, we see significant opportunities to scale our marketplace business model and drive efficiencies. … We look forward to providing additional details when our review is completed.”

Silverman, formerly at eBay, was only just appointed CEO at Etsy two weeks ago, taking the reigns from Chad Dickerson, who stepped down after nine years with the company.

The Brooklyn-based online retailer was also recently urged by activist hedge fund Black and White Capital, which owns roughly 2 percent of Etsy, to explore a potential sale.

Dragoneer, an early investor in Etsy, has worked with TPG before, including in its investment in music streaming service Spotify.

As of Monday’s close, shares of Etsy have fallen near 4 percent for the year-to-date period but are up more than 31 percent over the past 12 months.

ETSY 12-month performance

Source: FactSet

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