Electronics Boutique is attempting to slam the door to the lucrativeafter January collapse. games retail sector in Dixons' face by snapping up high street leisure rival Game.
The move follows rumours that Dixons was seeking to strengthen its own game store chain, @jakarta, by acquiring Game. Game became an attractive acquisition target after its share price collapsed to its 1999 low of 100p at the end of January, following a profit warning due to a weak Christmas period.
However, the speculation that there was a bidder circling Game led to its share price climbing 27 per cent in one day last week.
The increase forced Game to make an announcement to the London Stock Exchange on 24 February, which stated: 'Game has noted the movement in its share price. Game confirms that it has received an approach, which may or may not lead to a formal offer being made.'
John Steinbrecher, chief executive of Electronics Boutique, revealed: 'Game had to announce that an approach had been made, but we had to inform our shareholders that it was us making the approach. It is not a bid yet - we are just at the talking stage.'
The statement from Electronics Boutique confirmed that the two companies were in 'preliminary discussions' to negotiate a recommended offer for Game. It stated: 'If made, the directors of Electronics Boutique currently expect that the consideration under the offer would be a combination of Electronics Boutique ordinary shares and cash financed through Electronics Boutique's own resources and new bank facilities.'
Nick Gibson, analyst at Durlacher Research, said: 'It's not surprising.
It would offer a better economy of scale and it would be a complementary fit for Electronics Boutique.
'However, a bidding war with Dixons is still a possibility - it is still looking to strengthen @Jakarta. This is a good opportunity for either company to strengthen its position,' he added.
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