Hot Topic (HOTT) agreed on Thursday to be taken private by Sycamore Partners for $600 million as it looks to grow the business outside the public's eye.
The deal, at $14 a share in cash, represents a sharp premium over Hot Topic’s closing price of $10.75 on Wednesday. The transaction will be structured as a “one-step merger” with Hot Topic as the surviving corporation.
Subject to customary closing conditions and shareholder and regulatory approvals, the acquisition has been approved by both company’s boards of directors.
Shareholders owning 8.9% of Hot Topic’s outstanding stock, including CEO Lisa Harper, have agreed to vote in favor of the deal.
“We are very excited about the future growth for the company and know that Sycamore Partners will provide great resources and expertise to us as we operate as a private company,” Harper said.
Shares of Hot Topic were halted just before the announcement but jumped 30% when resumed shortly after the market opened.
The mall-based teen retailer reported a rise in same-store sales during the key holiday shopping season and said total sales during the period grew 4% to $177.3 million.
Guggenheim Securities is acting as financial advisor to Hot Topic, while Bank of America Merrill Lynch (BAC) is acting at Sycamore’s advisor.