Mike Ashley's Sports Direct Buys 26% Stake in Game DigitalBy
Sports Direct becomes second-largest shareholder in retailer
Shares in Game Digital rise for second consecutive day
Mike Ashley’s Sports Direct International Plc has bought a 26 percent stake in Game Digital Plc, adding the seller of Nintendo, Xbox and PlayStation consoles to a growing roster of retail investments.
Shares in Game Digital, based in Basingstoke, England, rose as much as 16 percent early Thursday, a day after a block purchase lifted them 23 percent. Sports Direct becomes the company’s second-largest shareholder after the company’s former private equity owner, Elliott Advisors.
Game Digital, which operates in the U.K. and Spain, has struggled with what it has described as a “challenging trading environment” this year and difficulty meeting demand for the popular Nintendo Switch console introduced in March. In June, its shares dropped 35 percent after it warned that annual sales growth would be below target. Even after the two-day rebound, its shares are down more than 50 percent this year.
Game Digital said in a statement Thursday that it was “looking forward to working collaboratively with Sports Direct,” which has stakes in other retailers including U.K. fashion brand French Connection Group Plc and Debenhams Plc and has bought U.S. retailer Eastern Mountain Sports out of bankruptcy.
The latest purchase comes as Ashley battles former executive Jeffrey Blue in court over allegations that the billionaire Sports Direct owner promised a 15 million-pound ($19.4 billion) bonus for reaching a share-price target. Ashley has dismissed the claim as boozy after-work banter, rather than a business agreement.