Jan 29, 2019
GameStop halts plan to sell company, sending stock plunging
Bloomberg News
,GameStop Corp. (GME.N) said it has stopped an effort to sell itself, citing a lack of available financing at terms a buyer would find acceptable. The shares tanked 22 per cent in early U.S. trading.
The retailer started a strategic review in June and sold its Spring Mobile business as part of that process. GameStop said it is continuing its search for a permanent chief executive officer.Key Insights
It’s another disappointment for investors who hoped for a sale as a way out. GameStop, the world’s largest independent video-game retailer, has been struggling to insulate itself from shrinking brick-and-mortar sales of games like Call of Duty. With physical video games out of vogue in the digital age, there weren’t a lot of strategic merger partners left for the company. That left private equity firms as the most obvious bidders -- Apollo and Sycamore Partners had been cited by the Wall Street Journal as potential acquirers. The shares had already tumbled Monday on news that Apple Inc. plans to launch a subscription video-game service, indicating that competition is only intensifying for the beleaguered retailer.
Market Reaction
GameStop dropped 22 percent to $12.11 Tuesday, before the markets opened. At current levels, the stock is worth about a third of its peak value, reached in December 2007. Its market capitalization stands about $1.2 billion, after the premarket slump.