Sports Direct acquires a quarter of GAME

UK sporting retailer Sports Direct has acquired 44m shares in GAME Digital.

This means that the company, headed by controversial UK businessman Mike Ashley, now owns over a quarter of the struggling video games specialist.

The move has seen GAME’s share price recover a little. It had fallen to as low as 19p last week and was yesterday trading at just 19.75p. Currently GAME shares are trading at 26.5p, having peaked earlier this morning at 28p.

GAME is aware that Sports Direct has taken significant strategic equity stakes in a number of retail and brand businesses across both the UK and USA, and is a leading retailer which partners with major global brands and suppliers,” GAME said.

GAME is pleased that the strategic value of the group has been recognised by Sports Direct through this acquisition of a 25.75% stake. The Group looks forward to working collaboratively with Sports Direct to explore the clear opportunities that a constructive partnership and collaboration can deliver for all stakeholders in the gaming, live events and rapidly growing esports markets in which it operates.”

Sports Direct and Ashley have stakes in a number of retailers including Debenhams, French Connection and Agent Provocateur. Ashley himself, who owns Newcastle United football club and whose personal fortune is estimated at over 2bn, is a notorious figure.

Just last week he told a court that he is a power drinker” who likes to binge drink. The admission came in a case he is currently contesting revolving around an alleged pub deal to pay a banker 15m.

In 2015 has name was dragged through the mud when a Guardian report spoke of terrible conditions for Sports Direct workers, many of whom were allegedly paid below the minimum wage.

GAME last month warned that its full year profits will be substantially below previous expectations”. It blamed the performance on what it has for a long time described as market challenges”, but also specifically this time on the Nintendo Switch stock situation.

Stock market blogThe Motley Foolsaid in June that it would not touch GAME’s shares with a barge pole”, adding: Just why anyone would consider investing in the high street video game retailer in 2017 is beyond me. With the popularity of online gaming making traditional consoles look increasingly outdated, I believe GAME — which struggles to compete on price with online behemoths such as Amazon anyway — is a company in terminal decline.