March 7, 2013
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Hot Topic (NASDAQ: HOTT ) soared 29% today after private-equity firm Sycamore Partners agreed to buy the teen apparel retailer for about $590 million.
So what: The all-cash deal values Hot Topic at $14 per share, and represents a premium of 30% to its closing price on Wednesday. Sycamore took over embattled women's apparel retailer Talbots last year for $391 million, so it is likely making the move to help diversify into a younger target market.
Now what: The deal is now subject to customary shareholder and regulatory approvals. "We are excited to partner with the Hot Topic management team and all of its talented and passionate employees," said Stefan Kaluzny, Managing Director of Sycamore Partners. "We look forward to supporting the Company's continued growth." But while Hot Topic is likely all popped out at this point, the news itself should draw attention to other struggling, but cash-rich, retailers as potentially tasty takeover targets.
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