GameStop to buy Electronics Boutique

Video game retailer GameStop Corporation agreed on Monday to merge with rival Electronics Boutique for $1.44 billion in cash and stock.

The merger would make GameStop Corp. a leading retailer in the global video game retail market. Once approved by the FTC, the acquisition will “make them bigger than Wal-Mart,” according to Michael Pachter, an analyst with Wedbush Morgan Securities.

Electronics Boutique shareholders will receive $38.15 in cash, plus 0.78795 shares of GameStop Class A common stock for each share of Electronics Boutique. Based on the closing price of GameStop’s Class A common stock of $21.61 on April 15, the stock component of the per share merger consideration is $17.03.

Following completion of the merger, R. Richard Fontaine, GameStop’s Chairman and Chief Executive Officer, and Daniel A. DeMatteo, GameStop’s Vice Chairman and Chief Operating Officer, will each serve in the same capacity for the combined company. Other key positions are under discussion and will be announced as the integration process moves forward.
The total acquisition price of $55.18 represents a 34.2 percent premium to the Friday closing price of Electronics Boutique’s stock.
The combined company, to retain the name of GameStop Corp., will be a leading global video game retailer with annual revenue of about $3.8 billion, with over 3,200 stores located in all 50 states, the District of Columbia, and Puerto Rico, as well as nearly 600 international stores located throughout Australia, Canada, Denmark, Germany, Ireland, Italy, New Zealand, Norway and Sweden.