Video game company is purchased as administrators knock on door
An announcement made in the run up to Easter revealed the details behind an acquisition of the majority share in Game Group. The purchase of the holding has been made by investment company OpCapita, and looks set to make it possible for Game to continue operations. The deal is being touted as a rescue plan for Game, which has recently been struggling with financial difficulties. Game Group has built up debts with a number of lenders, including high-street bank the Royal Bank of Scotland, and although the lenders were also considering a takeover, it is widely understood that they approved the OpCapita purchase before it went through.
As the company’s debts increased, the collapse of Game left it owing substantial sums not just to the banks, but also to suppliers, landlords, and the tax authorities. The value of the company on the stock market also collapsed, leaving shareholders with a loss.
Game operates a network of retail outlets in the UK and abroad. Although it seems that a number of these will need to be shut permanently, leading to total redundancies that are reckoned to be in the region of 2,000, the package put together by OpCapita for Game should also make it possible for more than 300 of the shops to keep trading. This will save the jobs of an estimated 3,100 staff members.
Administrators PwC stepped in just as Game had been considering expanding into a wider international market. The troubles have followed a period in which the group was attempting to build a wider international appeal, with attempted growth in the number of outlets and sales beyond the shores of the UK. Analysts have also pointed to the high fixed costs that have been on the Game Group balance sheet. Many industry commentators now believe that the company will need to adapt its operations and sales models in order to reduce costs, and will possibly move trade more towards the online market in the hope of competing with a number of its competitors in the highly trend conscious video gaming market.
The new management board of Game is being put together by OpCapita, and the company has appointed the former chief executive of Halfords Group, David Hamid, as chairman of Game to oversee the restructuring of operations. OpCapita has a track record of acquiring and saving struggling retail businesses in the UK, and another recent acquisition by the investment company is Comet, the high-street consumer electronics chain.
Statements by the managerial team behind the acquisition of Game make it clear that the intention is to retain video gaming as the core business of Game, and the focus will be on using the substantial market share gained by the company to produce a profitable bottom line.