[Updated] GameStop reportedly discussing buyout with private equity firms
Update: GameStop issued a brief statement confirming it is in “exploratory discussions with third parties regarding a potential transaction,” adding “There can be no assurance any agreement will result from these discussions. GameStop does not intend to make any additional comments regarding these discussions unless and until it is appropriate to do so.”
Struggling retail chain GameStop is discussing a potential buyout with private equity firms, according to Reuters. The report says that one of the private equity firms is Sycamore Partners and that GameStop has hired a financial advisor to help with the talks, though there’s no guarantee that a deal will come to fruition.
Founded in 1984 and once a mainstay for gamers, GameStop has struggled to cope with competition from online retailers like Amazon and digital distribution platforms including Steam, even after several attempts to diversify its business model. For example, last fall GameStop announced a used game subscription service, but that was shelved, reportedly because of issues with the chain’s point-of-sale system. Despite other efforts, including selling secondhand games and devices and the acquisition of novelty maker ThinkGeek in 2015, the company’s stock has fallen steadily since November 2013, when it hit $56.53 a share, to $13.96 now.
Reuter’s report comes about a month after investor Tiger Management sent a letter to GameStop, asking it to launch a strategic review of its business model. Around that time, CEO Michael Mauler also resigned after only three months in the position, citing personal reasons. Microsoft Xbox executive Shane Kim began serving as interim CEO at the beginning of June.
Sycamore Partners said it has no comment. TechCrunch has also contacted GameStop.