What started with a single store in Maidenhead trading under the name of Mike Ashley Sports has grown into a behemoth amongst sports-goods retailers in the UK. Sports Direct International group which owns a large number of sporting brands and trades under the SportsDirect.com brand is now making its latest High Street expansion move with a £51.9m bid for Game Digital. This is the latest expansion attempt by Sports Direct, after it failed to take over Debenhams.
Mike Ashley, the founder of Sport Direct said on Wednesday, it has “unconditionally” agreed to buy 14.9m shares in the capital of Game at a price of 30p for each Game share from Marlborough UK Micro-Cap Growth Fund. After the purchase, which is expected to be settled on Friday, Sports Direct will hold 66.6m game shares, or 38.5 per cent of the existing stock, plus voting rights. It currently holds nearly 30 per cent. Sports Direct, under takeover rules, must then make a cash offer for the remaining shares at 30p each. Sports Direct, which has invested in Game since July 2017 and is the group’s biggest shareholder, will finance the offer from its existing cash resources.
The game has been battling tough High Street conditions, while sales of hardware and consoles have been hit by competition. It saw a sales drop of 4.7% to £492.9m in its first half, despite a boost to some categories from popular games like Fortnite. But cost-cutting and higher margin sales helped interim pre-tax profits jump from 20.3% to £14.8m.
Sports Direct said it did not believe that, as a standalone business, Game was “able to weather the pressures that it is facing and believes that the offer, in providing Game with the wider benefit of Sports Direct’s operating and other experience and increased support, will secure Game’s future and allow it to navigate these pressures.”