GameStop Corp. and Electronics Boutique Holdings Corp. today announced that they have entered into a definitive agreement and plan of merger. The combined company, to be named GameStop, will be one of the leading global video game retailers, with annual revenues of approximately $3.8 billion.
Under the terms of the agreement, Electronics Boutique shareholders will receive $38.15 in cash, plus the equivalent of 0.79 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 Friday, April 15, the stock component of the per share merger consideration is $17.03.
The total transaction value is approximately $1.44 billion with consideration consisting of approximately 70% cash and 30% common stock. GameStop intends to fund the cash portion of the transaction through the issuance of $950 million in senior bonds and excess cash.
R. Richard Fontaine, GameStop's Chairman and Chief Executive Officer, said,
"This is an exciting transaction for everyone involved - our customers, our shareholders, and our two companies. 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. video game industry. We are merging these two companies from a position of strength. Each organization is performing very well now, and we will be able to do more together by extending geographic reach, improving customer service, and continuing our aggressive store growth plans. Electronics Boutique is an impressive organization with a strong management team and we look forward to sharing best practices across both of our companies. In addition, the combined company will retain a strong capital structure, which will allow us to continue to invest in our business going forward."
While Jeffrey Griffiths, Electronics Boutique's President and Chief Executive Officer, stated,
"Our focus at Electronics Boutique has been to be a leading global retailer of video games and by combining our company with GameStop, we are taking further strides towards reaching that goal. Moreover, this transaction makes a tremendous amount of sense from an operational, cultural, and synergistic perspective. We will now be in an even better position to broaden our reach and generate further efficiencies for our business and our customers. We are enormously proud of what Electronics Boutique has accomplished over the past 28 years, are excited about our future, and look forward to a smooth integration with the GameStop team."
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 still under discussion.
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