EB And Gamestop Merge
Gamestop announced this morning that it will merge with former rival Electronics Boutique. The new company will operate under the name Gamestop Corp., with roughly 3800 locations both in the US and internationally. This merger was not a hostile action, it was unanimously approved by the boards of each company.
Under the terms of the agreement the companies have reached, Electronics Boutique shareholders will receive $38.15 in cash as well as 0.78795 shares of GameStop Corp. stock for each share of Electronics Boutique. The deal will be worth roughly $1.44 billion when all is said and done. GameStop intends to fund the cash portion of the transaction through by issuing $950 million in bonds and using some of its excess cash.
R. Richard Fontaine, GameStop's Chairman and Chief Executive Officer, said, "This is an exciting transaction for everyone involved - our customers, our shareholders, and our two companies. This merger, which is a very positive step for GameStop, will enable us to enter new international markets and allow us to compete more effectively in the highly competitive U.S. video game industry. We are merging these two companies from a position of strength. Each organization is performing very well now, and we will be able to do more together by extending geographic reach, improving customer service, and continuing our aggressive store growth plans. Electronics Boutique is an impressive organization with a strong management team and we look forward to sharing best practices across both of our companies. In addition, the combined company will retain a strong capital structure, which will allow us to continue to invest in our business going forward."
Jeffrey Griffiths, Electronics Boutique's President and Chief Executive Officer, stated, "Our focus at Electronics Boutique has been to be a leading global retailer of video games and by combining our company with GameStop, we are taking further strides towards reaching that goal. Moreover, this transaction makes a tremendous amount of sense from an operational, cultural, and synergistic perspective. We will now be in an even better position to broaden our reach and generate further efficiencies for our business and our customers. We are enormously proud of what Electronics Boutique has accomplished over the past 28 years, are excited about our future, and look forward to a smooth integration with the GameStop team."
As far as staffing is concerned at the new combined company, R. Richard Fontaine, GameStop's Chairman and Chief Executive Officer, and Daniel A. DeMatteo, GameStop's Vice Chairman and Chief Operating Officer, will each continue to serve in the same capacity they have to date. Other positions have yet to be announced.
The deal still has to go through the normal channels before it becomes final. It has to eek by anti-trust procedures and has to be voted in by the shareholders of each company as well. However, early indications are that there will not be any problems in either area. GCA will have more on this story as it breaks.
