Sports Direct takes 26% stake in Game Digital
Sports Direct has bought 44m shares in video game retailer Game Digital, equivalent to a stake of 25.8%, just weeks after a profit warning sent the stock tumbling more than 30%.
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Game said on Thursday that it was aware Sports Direct has taken significant strategic equity stakes in a number of retail and brand businesses across both the UK and USA, “and is a leading retailer which partners with major global brands and suppliers”.
“Game is pleased that the strategic value of the group has been recognised by Sports Direct through this acquisition of a 25.75% stake. The group looks forward to working collaboratively with Sports Direct to explore the clear opportunities that a constructive partnership and collaboration can deliver for all stakeholders in the gaming, live events and rapidly growing e-sports markets in which it operates.”
Canaccord Genuity said there various areas in which Game could benefit from working with Sports Direct.
“There could be some scope for Game concessions in Sports Direct, albeit this would be limited to the larger stores (Game is currently trialling with WH Smith). Collaborations around games such as FIFA would make sense. There could also be opportunities around e-sports and Insomnia.
“We think there should be a reasonable overlap in terms of customer demographic. With Elliot holding circa 43%, anything more than a strategic stake on Sports Direct's part is clearly contingent on Elliot's position. There is also an asset backed loan (not currently being utilised) with change of control clauses attached to it.”
At 0918 BST, the shares were up 11.3% to 27p.