GameStop <3 Geeks: Will Buy GeekNet For $20/Share In Cash
Shares of Geeknet surged over 100 percent on May 26 after Hot Topic, Inc. offered to acquire the company for $17.50 per share. Geeknet announced the following day it has received a second buyout proposal for $20 per share, which constituted a "superior proposal."
"This acquisition creates value to all stakeholders involved," GameStop's Chief Executive Officer Paul Raines said in the press release. "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."
The deal has been approved by the Board of Directors of both companies and will be completed by means of a tender offer. The transaction places a total equity value of $140 million, including $37 million of cash and cash equivalents as of March 31.
GameStop noted in its press release that the acquisition provides a "natural extension" of its existing product line. The company expects the acquisition to immediately add more than $100 million and has a targeted internal rate of return that exceeds 20 percent.
The company further added that the acquisition will add to its diversified revenue stream as ThinkGeek is the number one brand in the fast growing collectibles category. The acquisition also extends and leverages its global, multichannel retail expertise to address Geeknet's profitability.
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