Grapevine-based GameStop, the largest U.S. video-game specialty retailer, agreed to buy online merchant Geeknet in a deal valued at about $140 million to add memorabilia that appeal to many of its customers.
Geeknet terminated an agreement to be bought by Hot Topic, and GameStop will reimburse Geeknet for the breakup associated with that deal, the companies said Tuesday. The Hot Topic bid was valued at $122 million.
The acquisition combines GameStop’s 6,600 stores with a retailer that sold $140.7 million of geek-chic merchandise last year, mostly through its ThinkGeek website. GameStop is betting that ThinkGeek’s offerings, which include World of Warcraft pint glasses and Mass Effect hoodies, will be an easy sell to its customer base of avid video gamers.
Last week, GameStop executives discussed their plans to expand the sale of licensed merchandise and collectibles, which they refer to as “Loot,” during an earnings conference call. CEO Paul Raines said they expect the business, piloted in Australia, grow to $500 million in three years.
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Products have been expanded to include cards, board games, T-shirts and exclusive collectibles tied to popular movies and TV shows, said Mike Mauler, president of GameStop’s international operations.
Geeknet’s ThinkGeek, based in Fairfax, Va., sells clothing, toys, gadgets and other products mostly based on popular movies, television shows and brands with “geek” appeal. Its products include Star Trek, The Big Bang Theory, Star Wars and the Marvel brand. Its ThinkGeek Solutions business distributes merchandise with video game themes through licensed Web stores.
Hot Topic offered $17.50 a share last month for Geeknet. A day later, Geeknet said it had received a bid for $20 a share, without identifying its new suitor. The online retailer’s board deemed the latter offer a superior proposal and gave Hot Topic until Monday to respond.
Geeknet had agreed to pay a 3 percent breakup fee to Hot Topic if the board terminated the agreement.
GameStop said it expects the deal to add more than $100 million to its annual sales. The boards of Geeknet and GameStop have approved the transaction, which is targeted to close by the end of GameStop’s second quarter.
GameStop shares (ticker: GME) rose 50 cents, or more than 1 percent, $43.97 on the New York Stock Exchange.
Staff writer Steve Kaskovich contributed to this report, which includes material from The Associated Press.