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Etsy Targeted by Black-and-White for Review Including a Sale

Etsy Inc. is being targeted by hedge fund Black-and-White Capital LP, which is urging the online marketplace for hand-made goods to explore strategic alternatives, including a possible sale, as it undertakes various operational and governance improvements.

Black-and-White, which says it owns about 2 percent of Etsy, is publicly releasing its proposals and criticisms after months of private talks, according to correspondence obtained by Bloomberg. The firm highlighted Etsy’s need to re-accelerate revenue growth and reduce operating costs, which it described as “bloated,” the letter shows.

Shares of Etsy rose as much as 6.5 percent. They climbed almost 2 percent to $11.28 at 3:24 p.m. in New York, giving the company a market value of about $1.3 billion. The stock has declined almost 30 percent since an initial public offering about two years ago. Etsy could fetch at least $15.50 in a sale, or be worth $30 after operational improvements, Black-and-White said.

“The company’s historical pattern of ill-advised spending has completely obfuscated the extremely attractive underlying marketplace business model,” Black-and-White wrote. “We are fully prepared to take any actions we believe are necessary to...


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