Sports Direct makes Game digital takeover bid and warns of job losses
Mike Ashley’s retail empire Sports Direct is making its latest High Street expansion move with a £51.9m bid for Game Digital.
Sports Direct said it will offer 30p a share for Game Digital under the cash bid, which was triggered after it upped its stake in the chain to 38.5%. But Sports Direct warned there may be job losses if the bid succeeds.
It would potentially close some sites, or merge them with other Sports Direct-owned stores, after a review. This is the latest expansion attempt by Sports Direct, after it failed to take over Debenhams.
Sports Direct has already snapped up a number of struggling companies, including House of Fraser and Evans Cycles. He also recently bought online furniture firm Sofa.
Mr Ashley’s empire was already Game’s largest investor and has been a shareholder in the specialist games retailer since July 2017.
Sports Direct said it did not believe that, as a standalone business, Game was “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,” it said.
It added the 30p-a-share bid was final and represents a 27% premium to Game’s closing price on Tuesday of 23.55p.
Sports Direct was required to make a mandatory offer for Game under UK takeover rules after taking its stake above 30%.
Game has been battling tough High Street conditions, while sales of hardware and consoles have been hit by competition.
It saw sales drop 4.7% to £492.9m in its first half, despite a boost to some categories from popular games like Fortnite.
But cost-cutting and higher margin sales helped interim pre-tax profits jump 20.3% to £14.8m.