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GAME asks shareholders to accept Sports Direct buyout

Company says 30 pence per share is a fair value considering industry challenges

UK and Spanish games retailer GAME has recommended its shareholders accept an offer from Sports Direct to buy the company.

The sports retailer, owned by Mike Ashley, increased its share in GAME to 38.49%, triggering a mandatory offer. The firm then offered 30 pence per share to GAME's shareholders, at a cost of 51.88 million.

Currently GAME's share price is 29.7 pence. At the time of the offer, it was 23.55 pence.

GAME has responded to the mandatory cash offer and says it recommends its shareholders accept the offer, based on independent advice.

"The Board has been considering the merits of the Mandatory Offer and consulting with its major shareholders and advisers, whilst also actively engaging in normal course discussions with Sports Direct and its advisers during this time," the firm said in a statement.

"Whilst the Board is disappointed that Sports Direct decided to issue its offer document unilaterally whilst these discussions were ongoing, the Board has unanimously concluded, following a period of detailed deliberation and having been so advised by Canaccord Genuity Limited, that 30 pence per share represents a fair value for the Group and intends, therefore, to recommend that shareholders accept the Mandatory Offer, as those members of the Board who hold GAME shares intend to do."

Sports Direct has been a major partner for GAME, and has been supporting the rollout of Belong -- GAME's pay-to-play video game concept that exists in some of its stores. GAME says it has taken this into account, alongside industry challenges such as the rapid digitisation of video games, the current negative outlook for retail and the "likely elongated current console lifecycle which are expected to impact the future financial performance of the Group."

Despite the concerns, GAME believes the rollout of BELONG provides significant opportunity for the business. "The Board is disappointed that it is not able to execute this strategy on a standalone basis," the statement adds."Nevertheless, the Board believes that the Mandatory Offer has the potential to deliver a number of strategic benefits to GAME's business, including the opportunity to benefit from Sports Direct's increased financial and operating support."

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