GameStop and Geeknet, Inc., the parent company of ThinkGeek and ThinkGeek Solutions, has announced that both companies have entered into a definitive agreement. This agreement specifies that GameStop will acquire all of the outstanding shares of Geeknet’s common stock for $20.00 per share in cash. This deal has been approved by the board of directors of both companies and will be completed through a tender offer. GameStop’s acquisition of Geeknet has a total equity value of approximately $140 million. This includes $37 million of cash and cash equivalents as of March 31, 2015.
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.”
Kathryn McCarthy, chief executive officer of Geeknet, mentioned in a statement: “Our Board and management team believe this transaction is in the best interest of Geeknet and its stockholders.” She added “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 will extend the product offering of GameStop and this move is expected to add an immediate incremental $100+ million in annual net sales. Geeknet will benefit from the transaction through the following points. This transaction will expand GameStop’s diversified revenue stream by adding ThinkGeek, the No. 1 brand in the fast growing collectibles category. This acquisition is expected to increase operating earnings, and has a targeted IRR that exceeds 20%. Online, pickup-at-store, web-in-store and standalone retail will become a strong part of GameStop. Geeknet’s proprietary product innovation capabilities and established portfolio of premier along with their hard-to-secure licenses will greatly help GameStop become a leader in the industry and furthermore, the transaction will improve the engagement with GameStop’s core customers, in particular the 40 million global PowerUp Rewards members.
According to 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 who represent approximately 21% of outstanding shares have all committed to engage in the tender offer.
About GameStop Corporation
GameStop Corporation is an American video game, consumer electronics, and wireless services retailer company. GameStop has headquarters in Grapevine, Texas and operates 6,457 retail stores throughout the United States, Canada, Australia, New Zealand, and Europe. Its retail stores primarily operate under the GameStop, EB Games, and Micromania brands. It also owns Kongregate, a site for browser-based video games; and Game Informer, a video game magazine. GameStop stock market evolution: http://www.marketwatch.com/investing/stock/gme
About J. Paul Raines
Mr. J. Paul Raines has been the Chief Executive Officer of GameStop Corp. and GameStop, Inc., since June 2010. Mr. Raines has more than 22 years of senior level experience in corporate management. He has a wealth of retail operations expertise and has an impressive track-record with executing strategies to support the customer experience and drive positive results. He serves as Director of The Home Depot Foundation., The Latin American Association (LAA) of Atlanta, and the Hispanic Association of Corporate Responsibility (HACR) Alumni. Mr. Raines earned his Bachelor of Science in industrial engineering from the Georgia Institute of Technology in 1985.
Geeknet, Inc. is headquartered in Fairfax County, Virginia and is the owner of the online retailer ThinkGeek, Formerly known as VA Research, VA Linux Systems, VA Software, and SourceForge, Inc., it was founded in 1993. Geeknet, Inc. stock market evolution: http://finance.yahoo.com/q?s=GKNT
About Kathryn K. McCarthy
Kathryn McCarthy is the President, Chief Executive Officer, and Chairman of the Board of Directors of Geeknet, Inc. She has served as part of the Board of Directors and as Chief Executive Officer and President since March 2013, and Chairman of the Board since July 2013. During her tenure at the Company, she has led efforts to increase brand awareness, expand GeekLabs exclusive product offerings, improve the site experience and upgrade technology, and expand to new channels, including wholesale and the ThinkGeek Solutions acquisition. Among other qualifications, Ms. McCarthy brings to the Board of Directors her financial and managerial experience as well as an in-depth knowledge of the Company’s business and operations.