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GAME Digital to put retail outlets, gaming areas into Sports Direct stores

As part of the collaboration agreement, Sports Direct has acquired a 50% interest in the rights of GAME’s BELONG arenas intellectual property for £3.2mln, with half of the arena business’s future profit also to go to Sports Direct

Sports Direct
Half of the BELONG arena business’s future profit will go to Sports Direct

Video games retailer GAME Digital PLC (LON:GMD) saw its shares jump today as it announced plans to put GAME outlets and esports gaming areas into selected Sports Direct (LON:SPD) stores.

As part of the collaboration agreement, Sports Direct – controlled by billionaire Mike Ashley - has acquired a 50% interest in the rights of GAME’s BELONG arena's intellectual property for £3.2mln, with half of the arena business’s future profit also to go to Sports Direct.

READ: GAME shares tumble after sudden departure of chief financial officer

GAME Spain Holdings Limited, a subsidiary of the FTSE All Share firm, has also agreed to loan up to £55mln to fund the new venues and develop BELONG’s website and its tournament management system.

Martyn Gibbs, GAME’s chief executive officer, said: “I am delighted that through the Collaboration Agreement we are able to accelerate the implementation of a key element of our transformation strategy to move from a seller of physical products to providing gaming experiences.”

Jon Kempster, Sports Direct’s chief financial officer said he was happy to partner with GAME in building an increased presence in the esports market through the Belong brand.

In reaction to the deal, GAME shares soared 13% higher to 43p, while Sports Direct shares were up 0.1% at 355.6p.

In a note to clients, analysts at 'house' broker Liberum Capital upgraded their rating for GAME to 'buy' from 'hold' with an unchanged target price of 650p. 

Liberum's analysts said the collaboration was exciting as “It will support a faster roll-out and investment into the Belong gaming arenas to further accelerate the group’s diversification into the high growth areas of esports and events.”

 -- Adds broker comment, update share prices --

 

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