GameStop Picks Up Elec. Boutique

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Video game retailer GameStop execs reported that boosting the chain's international presence was the key reason for acquiring competitor Electronics Boutique.

Gaming retailer GameStop announced on April 18 that it would buy out competitor Electronics Boutique in a cash and stock deal worth an estimated $1.4 billion. The newly combined company will operate under the GameStop name with a total of about 3,800 stores worldwide and combined sales in the range of $3.8 billion.

“The merger will create a great combination, give us great efficiencies and a platform to increase our international presence,” said CEO Richard Fontaine.

Electronics Boutique has spent the past 10 years cultivating its international business, said Electronic Boutique's CEO Jeffery Griffiths, to where it now accounts for 30 percent of the company's annual revenue.

Both CEOs noted that most of the expected growth in the industry is expected to take place outside the United States. Because of this Fontaine said domestic store expansion will slow in the coming year by about 25 percent, but the pace of growth internationally will not slacken.

“We are still a growth company and see tremendous international opportunities,” he said.

The executives did not go into great detail concerning potential store closings, but they pointed out that 170 GameStop and Electronic Boutique stores are co-located in the same shopping malls. And while some of these malls can support two game software facilities the majority cannot.

Fontaine was also reticent to talk about personnel changes. He said there could be a roll for the Electronics Boutique team, but no decision will be made until the deal is closed.

Both company's boards have approved the deal as have the people who have large stock holdings in each firm. The deal still must be approved by federal regulators.


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