Gamestop are in buyout talks

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Reuters have recently reported that Gamestop are in buyout talks with potential investors. These reports pushed share prices up by 11 percent.

Gamestop as a business has been in slow decline for a while now, in similar way to other retailers in the industry some of which have now disappeared already. Where some companies such as GAME have found ways to supplement their income through service expansion and with the help of investors, Gamestop has yet to receive an investment that will bail it out.

Sycamore Partners is one of the investment firms that’s interested in Gamestop, and have hired a financial advisor who will help with discussions between the firm and the retailer. The report from Reuter says that the result of these talks isn’t guaranteed to result in Gamestop deciding to sell.

Due to unfortunate circumstances Gamestop has had a rough year or so after their CEO stepped down because of medical reasons, only to sadly pass away soon after. The CEO who replaced them left after three months, though they were keen to say that it had no reason to do with the company’s financial position. Currently Kim Shane, former Boss of Xbox, is standing in as CEO for the company, and it was planned for someone else to be appointed on a permanent basis. However, this could all change if Gamestop is sold as a result of these talks.

Other senior management at Gamestop have left in recent months after the announcement of a decrease in annual income, in spite of increased sales, for the fourth quarter. Among the management to leave were Michael Hogen, EVP, and Tony Bartel, COO.

Interestingly Gamestop’s share price fell during E3, even with a huge number of games which were announced and have release dates within the current financial year. This is a sign that investors aren’t satisfied with the retailer, potentially due to slow action, or lack of action, regarding making new titles available for pre-order. It’s hard to say whether or not Gamestop will be bought out by an investment firm, but the sale would certainly cement the company’s future in the short-term even if it changes the outward appearance of the company to those familiar with it.