Mike Ashley launches £52m bid for games retailer Game Digital

Ashley made the move after announcing that his stake in the business had risen to more than 38%, above the threshold requiring the tycoon to make a takeover bid for the entire business. Sports Direct, which also owns the House of Fraser chain, immediately announced a review of Game’s 540 stores, which are located in the UK and Spain.

“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. “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.”

Sports Direct, which first took a stake in Game in 2017, increased its 29.9% shareholding to 38.49% triggering its bid for full control.

Sports Direct’s 30p per share offer for Game represents a 27% premium to the company’s closing share price on Tuesday, the last day of trading before the bid. Game’s shares rose 23% on the news to 29p.

The company said it intends to work with Game’s management team to “develop and review the existing strategic programme of repositioning and right sizing Game’s retail business”. Sports Direct also intends to further invest in, and expand, Game’s eSports operation, Belong.

“The retail and gaming sectors are fast moving and currently subject to challenging conditions,” the company said. “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.”

Last year, Ashley increased his grip on Game striking a deal to rollout Belongin pay-to-play concessions in Sports Direct stores across the country. Sports Direct paid £3.2m for 50% of the intellectual property owned by Belong including taking half the operation’s profits. The deal also included Sports Direct providing a £55m loan to Game’s Spanish division to help fund development of more eSports venues in the country.

Game Digital launched Belong in 2016 as part of a plan to move away from traditional retail sales, opening 19 venues.

Ashley took a 25.75% stake in Game Digital in 2017 a month after the retailer issued a profit warning due to a supply shortage of Nintendo’s hugely popular Switch console and a weaker lineup of new games.