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GameStop buying EB Games

Former retail rivals to merge in $1.44 billion deal; new company will be biggest game-store chain in America.
By Tor Thorsen, GameSpot
Posted May, 2007 11:13 am PT

With the launch of the PSP, the unveiling of all three next-generation platforms, and the almost assured launch of the next-gen Xbox, 2005 was already shaping up to be a wild year for the games industry. Today, it got even wilder when the two top specialty game retailers in the US revealed they will soon become one.

At the beginning of the East Coast business day, GameStop Corp. and Electronics Boutique Holdings Corp., owner of EB Games, announced they had signed a "definitive merger agreement." In fact, the deal will see GameStop, which saw $1.84 billion in sales during its last fiscal year, buy Electronics Boutique, which sold $1.98 billion sales during its 2005 fiscal year.

A joint statement sent out by both companies outlined the deal, under which GameStop will pay $38.15 in cash and 0.78795 shares of GameStop common stock for each Electronics Boutique share. The cash-stock combination is worth $55.18, 34.2 percent over EB's $41.12 closing price on Friday. EB's stock rocketed skyward on the news and was up over $14.50 as of press time. GameStop stock also rose on the news, gaining more than $3.10 in value.

Upon its closing, the agreement will see the two companies merge operations under the GameStop banner, which will then fly over 3,200 stores in the US and 600 others in Europe and Australasia. However, to not disrupt plans for the 2005 holiday season, no changes will be made in either company's organization until 2006. Then, in mall locations where there is duplication in retail outlets, store closings will follow "when appropriate," according to a GameStop official.

Though technically a takeover, the GameStop-EB merger met with glowing approval from both parties. "This transaction makes a tremendous amount of sense from an operational, cultural, and synergistic perspective," said EB CEO Jeffrey Griffiths. "We will now be in an even better position to broaden our reach and generate further efficiencies for our business and our customers." Griffiths' role in the new company was not identified.

GameStop chairman and chief executive officer R. Richard Fontaine also had good things to say about the deal, which isn't surprising, as he will retain this top slot after the merger. "We are merging these two companies from a position of strength," he said in a statement. Fontaine also confirmed that one motivation was GameStop's desire to expand outside its traditional North American market. "This merger ... will enable us to enter new international markets and allow us to compete more effectively in the highly competitive US video game industry."

The new GameStop will be well suited to fight off competition from rivals like Wal-Mart and Blockbuster Video's Game Rush subchain. According to Reuters, the post-merger company will be the biggest game retailer in the US, controlling some 25 percent of the market.

Retail Radar: GameCube price drop on the way?

Marketing materials have been sent to EB Games in preparation for a drop; GameStop details God Hand plot.
By Brendan Sinclair, GameSpot
Posted Apr 29, 2006 4:51 pm PT

Gaming retailers have a long history of inadvertently tipping people off to publishers' plans, and while information from retailers isn't official confirmation of anything (and shouldn't be treated as such), it can give a good heads-up about what's going down in the gaming world.

An EB Games employee today told GameSpot that the company had sent out promotional materials that strongly suggest Nintendo is planning a GameCube price drop next month. The materials, which were sent for use in the company's next marketing period (May 3 to May 23), include GameCube posters with GameCube-branded stickers that read "New Low Price," according to the employee. A specific price was not listed for the machine, which currently retails for $99.99 new, but it featured a blank number template, which employees could fill in should a drop be announced.

Accompanying the materials was a note explaining that the signage was sent so stores would be prepared if a drop was announced. While the note didn't specifically say the company knew an announcement about the price was imminent, the employee told GameSpot that similar materials were sent out in advance of the recent PlayStation 2 price drop from $149 to $129.

Turning to retailer Web sites, there are a few changes worth mentioning. Original Guitar Hero groupies concerned about the prospect of having to shell out $90 for the sequel bundled with another guitar can breathe a little easier, as GameStop has added a listing that will let gamers preorder the sequel and extra guitars separately. The site is currently asking $49.99 for Guitar Hero II on its own and $39.99 for a future shipment of individual guitars.

Meanwhile, God Hand has been dated by GameStop. Previously, the only indication that Capcom's PS2 action game was headed to the US was its appearance on the publisher's lineup of games to be shown at the Electronic Entertainment Expo. Now GameStop is soliciting preorders for the next game from Okami developer Clover Studios, with an October 10 shipping date and the following product description, which sheds new light on God Hand's plot:

The game follows a kind, aimless traveler named Jean who, after attempting to save a girl from some sort of danger, gets his right arm chopped off by a mercenary. Somehow, he comes into posession [sic] of the God Hand, the legendary gold-glowing hand of a great savior from olden times. Now, Jean has the power to save the world, but also has the scum of the land after him. The game is filled with wild combat as Jean uses his newly-earned skills in fighting and leaping, and the power of the glowing God Hand can charge up and give him new skills. The game also includes lots of comical gags for an over-the-top experience of violence and hilarity.

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