Sports Direct has ‘unconditionally’ agreed to buy 14.9 million shares in video games company Game Digital increasing its stake in the retailer to 38.5%.
The UK-based retail empire, owned by Mike Ashley, said it will make an offer at 30p a share, valuing the gaming group at £51.9m. Sports Direct said that under its ownership it would launch a review of Game’s business including potential store closures while it invests in the company’s e-sports business.
Sports Direct said the review would look at whether some stores should be “repurposed or closed including repositioning some Game sites into Sports Direct stores and open Belong stations and arenas within Sports Direct and House of Fraser sites.”
The retailer added: “Sports Direct does not believe that, as a standalone business, Game is able to weather the pressures that it is facing. 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.”
GlobalData retail analyst Zoe Mills 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. 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. This will give Game the space it needs for its Belong arenas to cater to demand.”
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