Sports Direct makes final £52m bid for Game
Written by Peter Walker
Mike Ashley’s Sports Direct has made a £51.9 million bid for Game, after increasing its stake in the gaming retailer to 38.5 per cent.
Sports Direct was already Game’s largest shareholder – and has been since July 2017 – with a holding of almost 20 per cent. The group state is has placed a final offer of 30p a share for shareholders.
Due to the size of the stake, Ashley must place an offer for the shares he does not control – a threshold of 30 per cent.
The statement did not rule out possible store closures and job losses under the plans to acquire Game. It also does not believe that Game is able to face up to the continued pressures in the retail industry “as a standalone business”.
The gaming retailer’s sales fell 4.7 per cent to £492.9 million in its first half, but cost cutting initiatives and higher margin sales boosted interim pre-tax profits 20.3 per cent to £14.8 million.
“Sports Direct believes that the offer, in providing Game with the wider benefit of Sports Direct’s operating and other experience and increased support, will secure Game’s future and allow it to navigate these pressures,” Sports Direct said in a statement.
Zoe Mills, retail analyst at GlobalData, commented: “Mike Ashley’s offer to buy Game outright brings with it the possibility to give the gaming retailer the ability to finally realise the potential of its BELONG gaming arenas.
"While Game launched the first arenas back in 2017, it has only grown to just over 20, despite the planned tie up with Sports Direct that was set to open its BELONG arenas in up to 100 new locations," she explained, adding: "Game’s core business is also being constantly eroded not just by online competition for boxed games, but by direct downloads to consoles and the freemium model where gamer spend is increasingly moving to in-game purchases, effectively bypassing retailers altogether.
“The acquisition can be mutually beneficial for both parties. While Game has struggled within its retail arm, now that Sports Direct controls House of Fraser, there is a clear option to utilise some of the increasingly redundant space in some of those stores," concluded Mills.