GMD4 Apr 2019 22:07
Sports Direct fast approaching mandatory offer threshold for UK retailer GAME Digital
UK retail giant Sports Direct is on the verge of being compelled by law to make an offer to buy High Street chain GAME Digital.
As of March 22nd, the Mike Ashley-owned giant owns 29.89 per cent of voting rights at the interactive entertainment retailer. Under UK law, owning 30 per cent of a company's voting rights is the point at which a mandatory offer must be made to buy it.
Sports Direct first invested in GAME back in July 2017, snapping up a 25.75 per cent slice of the retailer. This grew to 27.9 per cent in mid-March of this year, before drawing closer to the 30 per cent red line towards the end of the month.
The firm has also bought 50 per cent of GAME's relatively new Belong brand for £3.2m ($4.2m) in February 2018, in addition to providing £55m ($72.5m) in capital for the retailer as part of an on-going collaboration.
Since GAME went bust and came back in 2012, the firm has been trying to transition from being a pure retail play to having a more diverse and robust offering that doesn't rely just on consumers buying disks under the leadership of Martyn Gibbs (pictured, at the launch of its central London Wardour Street Belong store branch in December 2016)
In an aggressive marketplace, with competition from both digital stores and fellow retailers like Amazon that can offer far more competitive prices, it looked like the company might struggle to transition in time. This support from Sports Direct has certainly made it more likely that it will pull the switch off.
Indeed, without this backup, GAME likely could have gone the way of other UK retailers. Northern England indie chain Grainger and Scotland's Games Centre both went bust, while online outfit GameSeek also went out of business. Meanwhile, Toys R Us - a big supplier of games - went out of business, while The Hut Group-owned Zavvi has cut back supporting games.
We've reached out to both GAME Digital and Sports Direct for comment. The former says it doesn't comment on shareholder activity, simply pointing us to the press release announcing the two companies' aforementioned relationship announced in February 2018.
Sports Direct is
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