About a week ago, word got out that Hot Topic was preparing to purchase ThinkGeek parent company, Geeknet Inc. The original agreement was for Hot Topic to acquire Geeknet Inc. for $17.50 per share and $37 million in cash. However, that purchase was halted when another company threw its hat into the ring with a higher bid.
GameStop, the gaming retail store, announced today that it has outbid Hot Topic, and awill instead be purchasing Geeknet Inc. for $20 per share and $37 million in cash. That deal was made official today via a press release from the gaming retailer.
GameStop’s CEO, Paul Raines, offered some thoughts on the acquisition:
“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.”
As digital downloaded video games continue to grow in popularity, and with numerous online options for trading and selling video games, it’s no surprise that GameStop is looking for ways to expand its offerings and maintain its relationship with consumers. Given the products that ThinkGeek has been known to sell, which very often includes gaming paraphernalia, the acquisition makes perfect sense.
Over the last few years, GameStop has experienced various ups and downs in its stock, though the company did have a surge in stock price toward the end of 2013. That rise in stock price was due partly to the company beating earnings expectations, but also because the company was expanding into new areas, including pop culture and “geeky” merchandise.
After experiencing such success, it’s no wonder GameStop is interested in ThinkGeek based on the latter’s huge success in the geeky merchandise space. It also makes sense that GameStop would want to hamper Hot Topic from making the purchase, as that would threaten the gaming company’s growing success in the space.
In addition to providing GameStop with more market share in comparable merchandise, the deal will also be good for ThinkGeek’s growth, as it will likely provide new licensing options for the online retailer. According to Geeknet’s CEO, Kathryn McCarthy, this something the company and stockholders are happy about.
“Our Board and management team believe this transaction is in the best interest of Geeknet and its stockholders. 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.”
It’ll be interesting to see if the two companies remain fairly distant from each other, or if they decide instead to combine their efforts into a more seamless relationship. With that said, only time will tell what GameStop has in mind for the popular online retailer.
What do you think about GameStop acquiring Geeknet, Inc.? Share your thoughts in the comments.