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Sports Direct trigger takeover bid for GAME

Game Digital PLC

High street giant Sports Direct have moved to increase their stake in video game retailer GAME from 29.9% to a controlling stake.

The company triggered the process automatically by raising their shareholding to 38.49%, a level that obligates them to make an offer to purchase the rest of the business.

The offer the company have elected to make for the remainder of the business is 30 pence a share. This represents 27.4% more per share than the closing price of GAME yesterday (23.55 pence). The offer values the remaining shares at £51.88 million.

It remains to be seen whether shareholders are tempted by the offer. Like many high street retailers GAME have endured a challenging few years. The continuing trend towards digital rather than physical game purchases has forced them to move towards a new business model based on high street e-sports venues.

GAME have named this side of the business Belong and Sports Direct have expressed particular interest in this area. An agreement between Sports Direct and GAME last February gave the latter a 50% share in Belong.

Mike Ashley, the owner of Sports Direct, has a keen eye for high street ventures. The company recently purchased House of Fraser and have been linked with other high-profile retail brands.

Part of the agreement between GAME and Sports Direct in February was that Sports Direct shop floors could act as locations for Belong venues. Were GAME to be purchased outright there is a strong possibility that individual GAME stores would also be located within Sports Direct or House of Frasers stores and that specific GAME outlets would close.

Sports Direct have confirmed as much, stating that it will review the location, size and lease terms of existing GAME stores and that such a review could result in the closure of stores and staff redundancies.

Clearly, this will be a huge concern for the firm’s employees. It will also be a concern for those eager to see video game stores retain an individual high street presence rather than being subsumed into larger stores.

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