Analyst: Gamestation to be sold this year

Despite Gamestation recently revealing a store opening plan and major re-investment from parent company Blockbuster, the latest report from Wedbush Morgan will stir up yet more rumours of an impending deal with US games giant GameStop.

“We continue to believe that GameStop is the leading potential acquiror of Gamestation, a 238 store U.K. video game specialty retailer owned by Blockbuster,” says Pachter’s latest report.

“Blockbuster acquired Gamestation in October 2002, when it was a 72 store chain for an estimated $30 million. Gamestation recently announced plans to open 80 new stores in 2007. We believe that the sale of Rhino to GameStop indicates that the parties are discussing a sale of Gamestation over the next year, as it would allow GameStop to establish critical mass immediately in the key UK market.

“We believe that Gamestation stores average at least $700,000 in annual revenues (possibly as high as $1 million), but think that the chain will sell for less than 1x sales, implying a purchase price of under $160 million,” adds Pachter.

US specialist retailer GameStop certainly seems to be in a strong position, having recently reported a strong set of financials, indicating sales of $1.73 billion for the nine weeks ending December 30th 2006. Like for like sales were up 23.9 per cent when compared with the same period in 2005, with overall hardware sales up 77 per cent year on year.

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