Geeknet Terminates Agreement with Hot Topic
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Deal adds ThinkGeek, the leading brand in the fast growing
collectibles category, to GameStop’s family of brands
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Accretive to earnings with a targeted IRR that exceeds 20%
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Provides significant expansion to GameStop’s global multichannel
business
GRAPEVINE, Texas & FAIRFAX, Va.--(BUSINESS WIRE)--Jun. 2, 2015--
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:
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Expands GameStop’s diversified revenue stream by adding ThinkGeek, the
No. 1 brand in the fast growing collectibles category
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Once completed, the acquisition is expected to increase operating
earnings, and has a targeted IRR that exceeds 20%
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Extends the company’s global, multichannel retail expertise – online,
pickup-at-store, web-in-store and standalone retail
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Utilizes Geeknet’s proprietary product innovation capabilities and
established portfolio of premier, hard-to-secure licenses
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Leverages GameStop’s operational expertise and infrastructure to
address Geeknet’s profitability
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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
View source version on businesswire.com: http://www.businesswire.com/news/home/20150602006177/en/
Source: GameStop Corp. and Geeknet, Inc.
For GameStop:
Matt Hodges
Vice President, Public and Investor
Relations
GameStop Corp.
(817) 424-2130
or
For
Geeknet, Inc.
ir@geek.net
