After becoming the largest single investor in the company after US firm Elliot stepped away from the company last year, Sports Direct founder Mike Ashley has launched a £52 million bid to secure full control of UK video games retailer, GAME Digital. Since that initial investment, Ashley has now boosted his stake in the company to 38.49 per cent, moving beyond the threshold required to trigger a takeover bid.
Ashley first took an interest in the retailer in 2017 after securing a 26 per cent share in the company. He then invested a further £3.2m for 50 per cent of the profits and IP ownership of GAME’s exhibition spaces, Belong, including a deal to set up Belong arenas in Sports Direct stores with possible GAME concessions.
The company has now announced a review of GAME’s 540 stores across the UK and Spain, along with other companies without the Sports Direct Group, including House of Fraser, and has warned there could be a reduction in GAME’s staff headcount.
“The review will focus on whether the existing Game sites should be consolidated with others in the Sports Direct Group [including House of Fraser], repurposed or closed,” the company said (thanks to The Guardian). “The review could result in consolidation or closure of Game sites and a consequent reduction or relocation in the employment of Game’s employees and management.”
“The retail and gaming sectors are fast moving and currently subject to challenging conditions,” the company added. “Sports Direct does not believe that, as a standalone business, GAME is able to weather the pressures that it is facing. Sports Direct’s aim is to ensure GAME’s long-term sustainability and to escalate the evolution of the Belong business to accelerate the next stage of GAME’s development.”
While the news of store consolidations will come as a huge blow to GAME staff, being part of a larger organisation could be just what the chain needs in order to continue in what has been a torrid period for high-street retail in general. The double-whammy of declining physical game sales and those that remain increasingly moving to online retailers, such as Amazon and GAME’s own site has left the chain in a structurally difficult position in recent years, despite its best efforts to diversify its offering.