Sports Direct warns over store closures after £51.9m bid for Game Digital

Mike Ashley’s Sports Direct International has made a £51.9 million bid for retailer Game Digital, but warned over possible store closures and job losses under plans to overhaul the chain.

Sports Direct is offering 30p a share for Game under the cash bid, which was triggered after it upped its stake in the video games chain to 38.5%.

Sports Direct signalled there may be store closures and job losses if the bid succeeds amid plans to review Game’s operations and potentially merge some sites into its wider empire.

It marks Mr Ashley’s latest move to expand across the UK high street, having already snapped up department store chain House of Fraser, Evans Cycles and online player Sofa.com over the past year.

Sports Direct was already Game’s largest investor and has been a shareholder in the group since July 2017.

It has been working with Game to roll out concessions and its competitive gaming and eSports arenas, called Belong, in which Sports Direct has bought a 50% share of the intellectual property rights.

Sports Direct said it would look to open Belong sites within Sports Direct, House of Fraser or elsewhere in the group, “focusing on the customer experience and experiential retail offering”.

But it said its review of Game would cover its stores, headquarters and distribution centre.

It cautioned this 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 said: “Sports Direct does not believe that, as a standalone business, Game is able to weather the pressures that it is facing.

“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.”

Shares in Game jumped 24% after the bid.

Sports Direct added that the 30p-a-share bid was final and represented a 27% premium to Game’s closing price on Tuesday of 23.55p.

Sports Direct was required to make a mandatory offer for Game under UK takeover rules after taking its stake above 30%.

Game has been battling against tough high street conditions, while sales of hardware and consoles have been hit by competition.

It saw sales drop 4.7% to £492.9 million 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 20.3% to £14.8 million.