5th Jun 2019 17:58
LONDON (Alliance News) - Video game retailer Game Digital PLC late Wednesday said investors should take no action in relation to the 30 pence per share merger offer from Sports Direct International PLC earlier in the day.
"GAME's board of directors will respond more fully to the Mandatory Offer in due course. In the meantime, the Board recommends that shareholders should take no action," the company said. It added that it will be writing to shareholders with its formal response to the offer once Sports Direct has posted the offer document.
Sports Direct shares closed 0.3% lower on Wednesday at 293.80p, while Game shares closed 24% higher at 29.10p.
Sports Direct was forced to make the offer under rules of the takeover code after acquiring 14.8 million shares in Game at 30p from single shareholder, Marlborough UK Micro-Cap Growth Fund, raising its stake in Game to 38.49%.
Sports Direct said the 30p offer price, valuing Game at GBP51.9 million, will be paid in cash from existing resources. The FTSE 250-listed sport fashion retailer said the offer is final and will not be increased.
"The retail and gaming sectors are fast moving and currently subject to challenging conditions. Sports Direct does not believe that, as a standalone business, Game is able to weather the pressures that it is facing," the retailer said.
It added: "Sports Direct 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 whilst contributing to Game's long-term sustainability by escalating the evolution of the BELONG business and accelerating the next stage of Game's development."
BELONG is Game's shared gaming experience, where players can gather in shops and pay to play games.
Sports Direct is currently Game's largest shareholder. It has been an investor in the company since 2017.