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GameStop halts efforts to sell company...

by: Dan -
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I don't think it is much of a secret that GameStop has been struggling for some time, which is a bad thing when your primary clients pretty much loathe them due to their business practices and inability to consistently deliver pre-orders as promised.  As a result, in June 2018, the board of directors of GameStop commenced a review to increase company profitability that also included seeing if the company could be sold.

Fast forward to today, and GameStop put out a press release basically stating that despite its efforts, they did not find any takers for the primary business, although they did sell off the Spring Mobile part of the company bringing in a likely needed $735M cash infusion.  The money quote is as follows:

"In June 2018, GameStop’s Board, together with outside financial and legal advisors, commenced a review of a wide range of alternatives to enhance shareholder value. The Board undertook a comprehensive review process, including discussions with third parties regarding a potential sale of the company. GameStop’s Board has now terminated efforts to pursue a sale of the company due to the lack of available financing on terms that would be commercially acceptable to a prospective acquiror."

This appears to be saying that the GameStop board is valuing the company much higher than those that were potentially interested in buying it for.  That is not to say that either the board or potential buyers are wrong, which they probably aren't, but the reality is that GameStop looks to be in a slow death spiral, as the industry moves closer to all-digital and the resale business model of physical game copies slowly dries up.

Personally, I like competition in the marketplace, but in reality, GameStop going away would be a huge benefit to the local game stores that focus on their customers and giving you proper value for your trade ins. Will be interesting to see how this plays out, as I am thinking that their ultimate demise will not have much of an impact as some might think on the ever evolving gaming market.