GameStop (NYSE:GME) announced plans to acquire Geeknet, the parent company of online retailers ThinkGeek and ThinkGeek Solutions.
Last week, Geeknet entered an agreement to be acquired by specialty retailer Hot Topic for $17.50 per share and a total value of $122 million. Before the deal could close with Hot Topic, the company began receiving higher offers.
GameStop will pay $20 per share in cash, bringing Geeknet's value to approximately $140 million. Geeknet terminated the agreement with Hot Topic and will pay a termination fee as a result.
"This acquisition creates value to all stakeholders involved," said Paul Raines, GameStop CEO. "The addition of Geeknet is an important expansion of our global multichannel platform. 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."
Geeknet is expected to add an immediate valuation of $100 million to GameStop in incremental annual sales, according to a GameStop company statement.
GameStop plans to diversify its revenue stream with Geeknet's ThinkGeek collectibles category. The company also plans to utilize Geeknet's proprietary product innovation capabilities and portfolio of premier licenses, which are otherwise difficult to secure. In addition, the acquisition will expand their multichannel retail expertise in online, pickup-at-store, Web-in-store and standalone retail.
Geeknet is expected to drive deeper engagement with GameStop's core customers—particularly its 40 million PowerUp Rewards loyalty club members—by offering new, exclusive Geeknet merchandise.
GameStop has been investing in technology and omnichannel initiatives directly aimed at growing the PowerUp Rewards user base.
The retailer is also looking to expand into other technology segments by converting as many as 100 stores into one of its Technology Brands outlets. These outlets include Cricket Wireless; Spring Mobile, an AT&T reseller; and Simply Mac, where Apple computers, phones and tablets are sold. GameStop currently owns 63 Cricket Wireless locations, 361 Spring Mobile locations and 60 Simply Mac outlets.
The acquisition is expected to close by the end of GameStop's second quarter in 2015.
-See this GameStop press release
GameStop to shrink core business as gaming consoles go digital
GameStop picks up 160 RadioShack stores
GameStop promotes SVP to president of US stores
GameStop launches technology institute
GameStop deploys beacons to bring in millennials