GAME’s board of directors has just announced it will accept Sports Direct’s mandatory cash offer made on June 5th.
The High Street retailer said in an announcement: “The board has been considering the merits of the mandatory offer and consulting with its major shareholders and advisers, whilst also actively engaging in normal course discussions with Sports Direct and its advisers during this time. Whilst the board is disappointed that Sports Direct decided to issue its offer document unilaterally whilst these discussions were ongoing, the board has unanimously concluded, following a period of detailed deliberation and having been so advised by Canaccord Genuity Limited, that 30 pence per share represents a fair value for the group and intends, therefore, to recommend that shareholders accept the mandatory offer, as those members of the board who hold GAME shares intend to do.”
Further down the announcement, the firm mentioned a few reasons for the board to accept the offer: “In coming to this recommendation, the board has considered the growing size of Sports Direct’s shareholding in the group and the reliance GAME has on Sports Direct for supporting its future growth prospects (especially the future rollout of Belong and GAME venues under the collaboration agreement), combined with the ongoing industry headwinds, current negative retail market outlook and the likely elongated current console lifecycle which are expected to impact the future financial performance of the group.”
GAME’s board did mention being “disappointed” for not being able to execute its strategy of growth for its Belong arenas “on a standalone basis” but “believes that the mandatory offer has the potential to deliver a number of strategic benefits to GAME’s business, including the opportunity to benefit from Sports Direct’s increased financial and operating support.”
The announcement ended with the board recognising “the efforts of the management team in driving the broader transformation strategy” at GAME, which includes the launch of Belong.
Two weeks ago, Sports Direct founder Mike Ashley had launched a £52 million bid to secure full control of GAME.