GameStop Gives Up on Selling the Company
GameStop confirmed buyout rumors back in June and, just a few weeks ago, it seemed that buyers were finally setting sights on GameStop. It was said that a deal could happen as early as mid-February 2019 but there’s essentially no chance of that happening now. The company is no longer selling itself, but that’s far from good news for GameStop.
In a press release, GameStop announced it has stopped trying to sell the company “due to the lack of available financing on terms that would be commercially acceptable to a prospective acquirer.” This is to say GameStop’s current financing is unacceptable to buyers.
Once again, the company has reassured its board of directors that it’s still working towards solutions and that its recent sale of Spring Mobile for $700 million has created financial opportunities.
The Board continues to evaluate the optimal use of these proceeds, which could include reducing the company’s outstanding debt, funding share repurchases, reinvesting in core video game and collectibles businesses to drive growth, or a combination of these options.
In terms of looking forward, the GameStop board is still working with a leading executive search firm to find “a highly qualified, permanent CEO” for the company.
GameStop’s sales fluctuate with changes in the industry. New hardware or lack thereof impacts the company, as do changes to video game release date. We saw this occur during the 2018 holiday season as sales dipped 5% compared to the previous year.
Major customer service flubs, such as GameStop canceling Kingdom Hearts III PlayStation 4 Pro orders after overselling preorders, only add to the vitriol that has always surrounded GameStop. In this ever-changing, increasingly digital industry, GameStop will need to pivot quickly if it wants to stay afloat.