US games retailer GameStop has had a difficult 2018, and it seems a potential buyout thought to complete and go public by the middle of February 2019 has now fallen through.
"GameStop's Board has now terminated efforts to pursue a sale of the company due to the lack of available financing on terms that would be commercially acceptable to a prospective acquiror," the company said in a statement, sending GameStop shares tumbling more than 25 per cent to $11.59 (thanks, GI.biz).
The company's troubles are the usual, much discussed, issues facing many high street retailers, such as the shift to digital stores, competition from online retailers - Amazon in particular - and now an increasing move to subscription services from the big publishers and platform holders. A source close to GameStop reported that at least two companies - thought to be Sycamore Partners and Apollo Global Management - were interested in buying GameStop.
The news comes less than a year after long-standing CEO Paul Raines died in March 2018, after which GameStop CEO Michael Mauler quit the post "for personal reasons" after just three months in the role. Shane Kim, former GM of Microsoft Game Studios (as it was then called) - and seven-year board member of GameStop - is the current CEO.
In its financial report for FY2019’s Q2, ending August 4th, total global sales for GameStop decreased by 2.4 per cent, in line with expectations, down to $1.65 billion (£1.28bn). The particular issue was software sales – down 18.5 per cent for new titles, thanks to there being not many notable huge releases, and a fall of 9.9 per cent for used game sales.
Hardware sales, however, were driven to a growth spurt of some 20.1 per cent thanks to the Xbox One X making its way through its launch period and picking up new owners, while the Nintendo Switch and PlayStation 4 continued to enjoy strong numbers. At the time of this financial report, GameStop management revealed it was looking at options for third-parties "regarding a possible transaction" – that being, to sell the company.