GameStop Confirms Potential Buyout Rumors

Yesterday, Reuters reported on sources suggesting GameStop was looking into being acquired, after buyout equity firms expressed interest in purchasing the longstanding video game retailer. Now, while the jury is still out on a sale actually happening, we now know a GameStop buyout is at least on the table, as the company confirmed the rumors this afternoon.

In a brief press release, GameStop confirmed that it is in “exploratory talks with third parties regarding a potential transaction.” GameStop followed this up by suggesting there’s not express interest or a guarantee of a sale (hence ‘exploratory’), and that the company will not comment on the matter further unless there is anything new to discuss.

Since the rumors broke, Reuters and others have been quick to point to GameStop’s value eroding over time, from its highest peak in 2007 with a $9.4 billion market capitalization now down to $1.42 billion. This of course has been blamed on a number of factors, including online retailers, digital game sales growth, companies fighting used game sales with streaming services, low profit margins on new game sales, and so on and so forth.

GameStop has certainly been feeling the shifting market, as it closed 150 stores last year, on top of dealing with a major credit card breach. CEO Michael Mauler also left the company in May after only three months, citing personal reasons. He has since been replaced by board member and former Xbox executive Shane Kim as an interim chief.

In order to make up for declining revenue from game sales, GameStop has spent a lot of time recently pushing collectibles, revamping its customer rewards program, and selling apparel as well.

[Source: Gamestop]