Sports Direct snaps up Game Digital stake

London England. Mr Ashley is defending himself against a lawsuit filed by former business associate Jeff Blue

London England. Mr Ashley is defending himself against a lawsuit filed by former business associate Jeff Blue

"There could be some scope for Game concessions in Sports Direct, albeit this would be limited to the larger stores (Game is now trialling with WH Smith)".

Sports Direct International has acquired a major stake in Game Digital, the high street video game retailer has confirmed this morning.

"Game is pleased that the strategic value of the group has been recognised by Sports Direct through this acquisition of a 25.75pc stake", Game said.

This news comes after GAME issued a profit warning at the end of last month, even partly blaming the lack of Nintendo Switch stock for its ails.

This adds GAME to Ashley's portfolio, which also contains shares in Debenhams, Findel, Agent Provocateur and French Connection. In response to Sports Direct's acquisition the share price went up, and now it's just over 27.5p per share.

Mr Ashley has spent much of the past fortnight embroiled in a colourful court case centred on claims that he failed to honour a £15m payment to a former colleague.

Game's shares closed almost 23% higher on Wednesday at 24.25p amid speculation about higher-than-average trading activity.

Although perhaps surprising to some, investment banking, research, sales, and trading company Liberum told the BBC that there was some clear logic behind the shares purchase: "We see a number of reasons how Game and Sports Direct can gain from a closer working relationship but it is surely the similar customer demographics that must be the key draw card here".

Game trades from about 580 shops in the United Kingdom and Spain, and has sought to diversify into events, e-sports and other digital businesses as consumer trends shift shopping activity away from physical stores.

The long-struggling GAME has had a particularly tough time of late.

Elliot Advisors is understood to own a 40 per cent stake in Game, after it engineered the public listing of the company in 2014, and will be Ashley's key obstacle should he consider an official offer.

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