Hot Topic Outbid on Geeknet Deal
Hot Topic Inc. was jilted at the altar June 2, when Geeknet Inc. an online retailer of licensed merchandise based in Fairfax, Va., announced that it would not go through with a deal that was announced with the Los Angeles–area mall retailer on May 26.
Hot Topic was outbid by GameStop Corp., a Fortune 500 company and multichannel video game, consumer electronics and wireless services retailer headquartered in Grapevine, Texas. The GameStop deal has a total equity value of $140 million, which includes $37 million of cash and cash equivalents. The total equity value of the Hot Topic deal was $122 million. SunTrust Robinson Humphrey Inc. served as financial adviser, and Pepper Hamilton LLP served as legal adviser to GameStop. Guggenheim Securities served as Geeknet’s exclusive financial adviser, and Wachtell, Lipton, Rosen & Katz served as its legal adviser.
Geeknet announced that it cut its deal with Hot Topic on June 2. It will pay a fee for terminating the deal, according to a company statement.
GameStop Chief Executive Officer Paul Raines said that the deal would fuel growth for his company.
“This acquisition creates value to all stakeholders involved. The addition of Geeknet is an important expansion of our global multichannel platform, and we are excited to leverage their product-development expertise to broaden our product offering in the fast-growing collectibles category and deepen relationships with our existing customer base.”
Kathryn McCarthy, Geeknet’s chief executive officer, said the deal would make her company even more high profile. “Our board and management team believe this transaction is in the best interest of Geeknet and its stockholders,” McCarthy said. “As a part of GameStop’s family of brands, Geeknet will be well-positioned to achieve our goals of increasing our brand awareness and expanding our product offerings.”
A request for comment from Hot Topic was not answered by press time.
Hot Topic made its reputation as the go-to place at the mall for rock bands’ merchandise. Geeknet specializes as an online retailer and wholesaler of merchandise licensed from TV shows, movies and other media with science-fiction, superhero and fantasy themes.
Lisa Harper, chief executive officer of Hot Topic, said Geeknet would expand its business with film and TV merchandise. “Geeknet’s unique concept and approach to the online retail community is a strong fit with our business strategy, which is focused on delivering great products for avid fans of various licensed properties, and we are excited about the opportunity to help drive profitable growth and further enhance value for Geeknet’s customers,” she said in a statement.
Geeknet is a public company. In its last quarter, it reported $19 million in net revenue for the quarter compared with $22.6 million in net revenue in the same time the previous year.
