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Game Digital boosted as Sports Direct takes 25% stake

Mike Ashley, who owns 54% of Sports Direct, has barely been out of the headlines in the past week
picture of gaming console
e-sports is the key says analysts

Sports Direct PLC (LON:SPD) has a taken a 25% stake struggling video games retailer Game Digital PLC (LON:GMD), the latest in a series of stakes the firm has taken in rival retailers.

GAME confirmed this morning Sports Direct has acquired 25.75% adding  it was" pleased the strategic value of the group had been recognised" by the Mike Ashley-owned group.

Ashley, who owns 54% of Sports Direct, has barely been out of the headlines in the past week due to a legal spat that has seen him confess to be being a ‘power drinker’ alongside reports of him throwing up in the fireplace at one meeting held in a pub.

GAME shares slumped last month as it warned full-year profits are likely to come in “substantially below previous expectations”.

The high street retailer expected the going to be tough in the second half of this year, but said that the “continued softness” in PlayStation and Xbox sales has impacted its performance.

In a statement, it said it “looked forward to working collaboratively with Sports Direct to explore the clear opportunities that a constructive partnership and collaboration can deliver for all stakeholders in the gaming, live events and rapidly growing esports markets in which it operates”.

Sports Direct also has stakes in French Connection (LON:FCCN) and department store chain Debenhams (LON:DEBS), Findel PLC (LON:FDL) and JD Sports PLC (LON:JD.)

Broker Liberum said: “We see a number of reasons how GAME and SPD can gain from a closer working relationship but it is surely the similar customer demographics that must be the key draw card here.

“The strategic play is not likely to have any concern with reference to the console cycle but rather growth in e-sports, Insomnia events and in-store gaming.”

GAME shares rose 13% to 27.5p.

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