Monday, April 18, 2005

Gamestop Buys Electronics Boutique

I guess this means that having an EB or Gamestop every two blocks between here and forever is going to stop.

From Marketwatch (excerpted--full release at
NEW YORK (MarketWatch) -- GameStop Corp. acquired rival Electronics Boutique Holdings Corp. in a cash and stock deal worth about $1.44 billion, the video game retailers said Monday.

Under terms of the agreement, each Electronics Boutique share will be exchanged for $38.15 in cash and 0.78795 GameStop shares.

Based on Friday's closing prices, Electronics Boutique shares are being valued at $55.18 each, or at a 34% premium.

The combined company, to be named GameStop Corp., will generate annual revenues of approximately $3.8 billion, with over 3,200 stores located in the United States, as well as nearly 600 international stores, wrote Michael Pachter, analyst for Wedbush Morgan Securities, in a note to investors.

GameStop expects the acquisition to begin adding to earnings in the second half of 2005. It said the deal was attractive because it provides an opportunity for entry into new international markets.

I'm not sure I understand the need for this deal, except that both of these companies seemed to be opening huge numbers of locations very close to each other, and somebody was going to lose. I wouldn't be surprised at all if 500 of the 3,200 locations were closed, since they're all probably within walking distance of another, now non-competing store.

This can't be good news for gamers. Less competition on pricing, fewer locations, no diversity in the commercial approach. Blech. Given how many exclusive licenses EA has snagged in the sports world, I now see a future where something called "FOOTBALL GAME" is released each fall and it's available for purchase at "THE GAME STORE."

Site Meter