Geeknet Terminates Agreement with Hot Topic
- Deal adds ThinkGeek, the leading brand
in the fast growing collectibles category, to GameStop’s family of
brands
- Accretive to earnings with a targeted
IRR that exceeds 20%
- Provides significant expansion to
GameStop’s global multichannel business
GameStop Corp. (NYSE: GME), a family of specialty retail brands
that makes the most popular technologies affordable and simple, and
Geeknet, Inc. (Nasdaq: GKNT) (“Geeknet”), the parent company of
ThinkGeek and ThinkGeek Solutions, today announced they have
entered into a definitive agreement under which GameStop will
acquire all of the outstanding shares of Geeknet’s common stock for
$20.00 per share in cash. The transaction has been approved by the
board of directors of both companies and will be completed by means
of a tender offer. The transaction has a total equity value of
approximately $140 million, including $37 million of cash and cash
equivalents as of March 31, 2015.
Geeknet also announced that it had terminated its previously
announced merger agreement with Hot Topic, Inc. (“Hot Topic”).
Following discussion with both GameStop and Hot Topic, the Board of
Directors of Geeknet determined that the GameStop transaction
represented a superior proposal. Geeknet will pay Hot Topic a
termination fee pursuant to the Hot Topic agreement, for which
GameStop has agreed to reimburse Geeknet.
Paul Raines, chief executive officer of GameStop, stated, “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.”
“Our Board and management team believe this transaction is in
the best interest of Geeknet and its stockholders,” said Kathryn
McCarthy, chief executive officer of Geeknet. “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.”
The transaction provides a natural extension of GameStop’s
existing product offering and is expected to add an immediate
incremental $100+ million in annual net sales. The acquisition of
Geeknet will enhance shareholder value through the following
strategic benefits:
- Expands GameStop’s diversified revenue
stream by adding ThinkGeek, the No. 1 brand in the fast growing
collectibles category
- Once completed, the acquisition is
expected to increase operating earnings, and has a targeted IRR
that exceeds 20%
- Extends the company’s global,
multichannel retail expertise – online, pickup-at-store,
web-in-store and standalone retail
- Utilizes Geeknet’s proprietary product
innovation capabilities and established portfolio of premier,
hard-to-secure licenses
- Leverages GameStop’s operational
expertise and infrastructure to address Geeknet’s
profitability
- Drive deeper engagement with GameStop’s
core customers, in particular the 40 million global PowerUp Rewards
members, by offering them exclusive, unique and cutting edge
merchandise related to their favorite entertainment
Under the terms of the definitive agreement, GameStop will
commence a tender offer for all outstanding common shares of
Geeknet, at $20.00 per share in cash. The tender offer is
conditioned on Geeknet’s stockholders tendering at least a majority
of Geeknet’s outstanding shares in the tender offer, clearance
under the Hart-Scott-Rodino Antitrust Improvements Act and other
customary closing conditions. The acquisition is expected to close
by the end of GameStop’s second quarter 2015. Geeknet stockholders
representing approximately 21% of outstanding shares have committed
to participate in the tender offer.
SunTrust Robinson Humphrey, Inc. served as financial advisor and
Pepper Hamilton LLP served as legal advisor to GameStop. Guggenheim
Securities served as Geeknet’s exclusive financial advisor and
Wachtell, Lipton, Rosen & Katz served as its legal advisor.
About GameStop
GameStop Corp. (NYSE: GME), a Fortune 500 and S&P 500
company headquartered in Grapevine, Texas, is a global,
multichannel video game, consumer electronics and wireless services
retailer. GameStop operates more than 6,600 stores across 14
countries. The company’s consumer product network also includes
www.gamestop.com; www.Kongregate.com, a leading browser-based game
site; and Game Informer® magazine, the world’s leading print and
digital video game publication. In addition, our Technology Brands
segment includes our Simply Mac and Spring Mobile businesses.
Simply Mac, www.simplymac.com, operates 71 stores, selling the full
line of Apple products, including laptops, tablets, and smartphones
and offering Apple certified warranty and repair services. Spring
Mobile, http://springmobile.com, sells post-paid AT&T services
and wireless products through its 410 AT&T branded stores and
offers pre-paid wireless services, devices and related accessories
through its 68 Cricket branded stores in select markets throughout
the United States.
General information about GameStop Corp. can be obtained at the
company's corporate website. Follow GameStop on Twitter @
www.twitter.com/GameStop and find GameStop on Facebook @
www.facebook.com/GameStop.
About Geeknet
Geeknet, Inc. (NASDAQ: GKNT) is the parent company of ThinkGeek
and ThinkGeek Solutions. ThinkGeek is the premier retailer for the
global geek community. Since 1999, ThinkGeek has been creating a
world where everyone can express their inner geek, embrace their
passions, and connect with each other. ThinkGeek Solutions, which
distributes video game-themed merchandise through licensed
web-stores for the gaming community, joined our Geeknet family in
August 2014. Our obsession is creating and sharing unique and
authentic product experiences that stimulate our fans' imaginations
and fuel their geek core. We believe that there is a geek in
everyone and that it should be celebrated. Want to learn more?
Check out thinkgeek.com or geek.net.
Additional Information
The tender offer for the outstanding common stock of Geeknet has
not yet commenced. This communication is not an offer to purchase
or a solicitation of an offer to sell shares of Geeknet's common
stock. The solicitation and the offer to purchase shares of
Geeknet's common stock will only be made pursuant to an offer to
purchase and related materials that GameStop intends to file with
the Securities and Exchange Commission (the "SEC"). At the time the
tender offer is commenced, GameStop will file a Tender Offer
Statement on Schedule TO with the SEC, and Geeknet will file a
Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the tender offer. GEEKNET STOCKHOLDERS ARE ADVISED TO
READ THE SCHEDULE TO (INCLUDING AN OFFER TO PURCHASE, A RELATED
LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS) AND THE SCHEDULE
14D-9, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME,
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE, BEFORE MAKING ANY DECISION WITH RESPECT TO THE
TENDER OFFER BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES THERETO.
The tender offer materials and the Solicitation/Recommendation
Statement will be made available for free at the SEC's website at
www.sec.gov.
Forward-Looking Statements
This release contains forward-looking statements regarding,
among other things, statements related to expectations, goals,
plans, objectives and future events. Geeknet and GameStop intend
such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in Section 21E
of the Securities Exchange Act of 1934 and the Private Securities
Reform Act of 1995. In some cases, forward-looking statements can
be identified by the following words: “may,” “will,” “could,”
“would,” “should,” “expect,” “intend,” “plan,” “anticipate,”
“believe,” “estimate,” “predict,” “project,” “potential,”
“continue,” “ongoing,” “outlook,” “guidance” or the negative of
these terms or other comparable terminology, although not all
forward-looking statements contain these words. The forward-looking
information and statements are or may be based on a series of
projections and estimates and involve risks and uncertainties.
Various factors could adversely affect Geeknet’s and GameStop’s
operations, business or financial results in the future and cause
its actual results to differ materially from those contained in the
forward-looking statements. The forward-looking statements
contained herein include assumptions about Geeknet’s and GameStop’s
operations, and certain plans, activities or events which we expect
will or may occur in the future. Risks and uncertainties related to
the proposed transactions include, among others: (1) the ability to
obtain requisite regulatory approvals required to complete proposed
transactions, (2) the satisfaction of the conditions to the
consummation of the proposed transactions, (3) the timing of the
completion of the proposed transactions and (4) the potential
impact of the announcement or consummation of the proposed
transactions on Geeknet’s and GameStop’s relationships, including
with employees, suppliers and customers. With respect to Geeknet,
please also refer to those factors discussed in detail in the “Risk
Factors” sections contained in Geeknet’s Annual Report on Form 10-K
for the year ended December 31, 2014 filed with the SEC on February
23, 2015 and in Geeknet’s subsequently filed Form 10-Q. With
respect to GameStop, please also refer to those factors discussed
in detail in the “Risk Factors” section contained in GameStop’s
Annual Report on Form 10-K for the year ended Jan. 31, 2015 filed
with the SEC on March 30, 2015. Given these uncertainties, undue
reliance should not be placed on these forward-looking statements.
Neither Geeknet nor GameStop undertakes any obligation to release
any revisions to these forward-looking statements publicly to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
GKNT-F
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version on businesswire.com: http://www.businesswire.com/news/home/20150602006177/en/
For GameStop:Matt HodgesVice President, Public and Investor
RelationsGameStop Corp.(817) 424-2130orFor Geeknet,
Inc.ir@geek.net
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