Buyout mania continues: GameStop snaps up Electronics Boutique
4/18/2005 10:50:36 AM, by Eric Bangeman
The videogame retail market became a bit more consolidated today as GameStop announced its acquisition of Electronics Boutique for US$1.44 billion in cash and stock. According to the terms of the deal, EB shareholders will get $38.15 and 0.78795 shares of GameStop for each share of EB.
From a sales standpoint, EB is the bigger of the two, with sales of $1.98 billion for FY 2005. GameStop totaled $1.84 billion for the same time period. Combined, the two companies control about 25 percent of the market, which means the acquisition should pass muster from an antitrust standpoint. After the deal goes through, GameStop will be the largest single videogame retailer, topping Wal-Mart, Best Buy, and other big box retailers. The chain, which will keep the GameStop name, will total over 3,200 stores in the US and close to 600 overseas.
Analysts are happy about the deal because it will make GameStop the primary destination for "hardcore" gamers, and because the two companies are a natural match. The deal will likely result in the closing of some EB stores in markets where both retailers have a heavy presence. EB stock has shot up considerably since the market opened, while GameStop's has dropped — that's not out of the ordinary.
Prior to the announcements, the two companies were been eyeing Europe, with plans to open a number of stores this year. In addition, at least one of the two was in recent discussions with UK retailer GAME over a possible acquisition. GAME says those discussions have since concluded.
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