According to the Wall Street Journal, private equity firms Apollo Global Management and Sycamore Partners are reportedly bidding to acquire GameStop. A deal could be made as early as mid-February 2019.
GameStop has $817 million in debt to reduce, and analysts are recommending the company closes some stores and goes private in order to alleviate the pressures of diversifying its revenue, even during what’s clearly a financial hardship for the company. Although GameStop is becoming increasingly known for its ThinkGeek product line, its accessories, the wall of Funko Pops, and the like, GameStop’s revenue is still 50% comprised of its new and used game sales.
While things have been looking rough for GameStop for quite some time the company is well aware it’s in an adapt or die situation. It sold Spring Mobile to help alleviate debt and, perhaps more importantly, enhance other revenue streams. But it doesn’t seem like enough to offset the company’s losses and combat the decline in preorder sales.
Rest assured that even a buyout doesn’t necessarily mean the end of GameStop as we know it, but every year players seem to skew more and more towards digital purchases, raising concerns for the future of brick and mortar video game businesses.