Geeknet agrees to be acquired by GameStop in $140 million deal

Published June 2, 2015 by Robert Powell, III

Texas-based GameStop Corp. has reached an agreement to acquire Fairfax-based Geeknet Inc. in a deal valued at $140 million.

Tuesday’s announcement represents the latest move in the courtship of online retailer Geeknet, the parent company of ThinkGeek and ThinkGeek Solutions. Geeknet had signed a deal to be acquired by Miami-based retailer Hot Topic on May 25 for $17.50 a share only to announce days later it had received an unsolicited offer of $20 a share from an undisclosed bidder.

Geeknet’s board determined that the second bidder, now revealed as GameStop, made a superior offer. Geeknet has terminated its merger deal with Hot Topic and will pay it a 3 percent termination fee required by that agreement. Geeknet said GameStop will reimburse it for cost of the fee.

GameStop is a Fortune 500 company based in Grapevine, Texas. It is a multichannel video game, consumer electronics and wireless services retailer, operating more than 6,600 stores in 14 countries.

GameStop will acquire all outstanding shares of Geeknet's common stock for $20 per share in cash. The deal has been approved by the board of directors of both companies and will be completed through a tender offer.

“Our board and management team believe this transaction is in the best interest of Geeknet and its stockholders,” Kathryn McCarthy, chief executive officer of Geeknet, said in a statement. “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 is expected to add more than $100 million to GameStop’s annual net sales. The acquisition is expected to close by the end of GameStop's second quarter 2015. Geeknet stockholders representing approximately 21 percent of outstanding shares have committed to participate in the tender offer.

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 advisor and Wachtell, Lipton, Rosen & Katz served as its legal adviser.