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April 18, 2005

Videogame Sellers To Merge

Courtesy of TechWeb News

GameStop Corp. and Electronic Boutique Holdings Corp. on Monday said they have agreed to merge in a $1.44 billion stock-and-cash deal that would form a videogame retail giant.

Under terms of the agreement, shareholders of Electronics Boutique, based in West Chester, Pa., would receive $38.15 and 0.78795 shares of GameStop stock for each EB share. Based on Friday stock prices, the offer amounts to a 34.2 percent premium to EB shareholders, according to Grapevine, Texas-based, GameStop. The merger is expected to be completed later this year.

The combined company, which would be named GameStop, would have more than 3,200 stores located in all 50 U.S. states, as well as 600 stores outside the United States. Annual revenues would be $3.8 billion.

"This merger, which is a very positive step for GameStop, will enable us to enter new international markets and allow us to compete more effectively in the highly competitive U.S. videogame industry," R. Richard Fontaine, chairman and chief executive of GameStop, said in a statement.

Fontaine and Daniel A. DeMatteo, vice chairman and chief operating officer at GameStop, would hold the same positions in the combined company. Other key positions are under discussion and are scheduled to be announced as the deal progresses.

The boards of both companies have approved the transaction, which would require approval by shareholders.

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