Oct. 1 (Bloomberg) -- GameStop Corp., the world's largest video-game retailer, agreed to buy France's Micromania for $700 million, including debt, to enter Europe's second-biggest video game market.

Acquiring Micromania's 332 stores is part of GameStop's strategy to speed growth in Europe and swells its European store count to more than 1,077, about a fifth of its total. The company said in August expanding by acquisition in Europe was easier than opening stores because real estate is more scarce.

GameStop has lessened its dependence on the U.S., where it trails Wal-Mart Stores Inc., the world's largest retailer, in U.S. video-game sales. The company boosted profit in the past eight quarters as customers around the world purchased games for Sony Corp.'s PlayStation and Nintendo Co.'s Wii consoles.

GameStop, based in Grapevine, Texas, said today in a statement the purchase will contribute to profit in its fourth quarter ending Jan. 31, and will help GameStop increase earnings per share by 25 percent in the 12 months ending in early 2010.

Chris Olivera, a GameStop spokesman, would not say how much debt the company is assuming in the Micromania purchase.

Gamestop said Pierre Cuilleret, 41, will continue to head Micromania.

GameStop rose 98 cents, or 2.9 percent, to $35.19 at 10:37 a.m. in New York Stock Exchange composite trading. Before today, the shares fell 45 percent this year.

L Capital

The retailer is purchasing Micromania from L Capital, which took control of the French company in 2005 after acquiring a minority stake in 2001. L Capital is a private- equity fund with 600 million euros ($840 million) under management and is sponsored by Paris-based LVMH Moet Hennessy Louis Vuitton SA, the world's largest luxury-goods company.

GameStop added eight stores in New Zealand when it purchased The Gamesman in July, and gained 49 locations in Norway after buying Free Record Shop Norway in March. GameStop will operate about 5,889 stores when the purchases closes, which it expects to occur next month.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

Last Updated: October 1, 2008 10:45 EDT