Sycamore to Acquire Hot Topic for $600M
Partners at private equity firm Sycamore will purchase teen apparel retailer Hot Topic Inc. in a private $600 million deal. California-based Hot Topic will become an addition to Sycamore’s retail portfolio that includes Talbots Inc. Sycamore, founded by retail industry veteran Stefan Kaluzny in 2011, will pay $14 per share in cash. Shares in the retailer have risen 22% in the last 12 months.
“We are pleased that this transaction will allow us to deliver positive results for our shareholders,” Lisa M. Harper, the company’s chairwoman and chief executive, said in a statement. “In addition, 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.”
Hot Topic is known for its music and movie merchandise, and saw an unprecedented demand for apparel based on the Twilight movie series in 2009, which helped the retailer post its biggest full-year revenue ($761.07 million) and made it one of the top performers in the teen retail industry that year. However, sales have gradually declined since then and the company reported 2012 sales of $697.9 million, and revenue in the past three quarters have missed Wall Street estimates.