GameStop to Buy Rival for $1.44 Billion

Video game retailer GameStop Corp. said Monday that it would buy competitor Electronics Boutique Holdings Corp. for $1.44 billion in cash and stock, creating a company that would rival Wal-Mart in game sales.

The combined entity would have more than 3,200 stores in the United States and 600 stores internationally, with annual revenue approaching $4 billion and a dominant position in the growing market for used-game sales.

“The new, larger company should have a significantly stronger position in the video game retail marketplace, especially as the new console hardware systems launch later this year,” Harris Nesbitt analyst Edward Williams said.

The video game industry is preparing for a rocky transition as it moves from one generation of game consoles to a more advanced one. Such changes have historically led to fluctuating sales.

The Federal Trade Commission will review antitrust implications of the GameStop-Electronics Boutique transaction.

Analysts said the combined company would have a market share of about 22%, about equal to Wal-Mart Stores Inc.’s in game sales.

Shareholders of Electronics Boutique will receive $38.15 in cash and 0.79 share of GameStop Class A common stock for each Electronics Boutique share, the firms said. The deal was worth $1.49 billion at Monday’s close.

Shares in West Chester, Pa.-based Electronics Boutique rose $14.09 to $55.21 on Nasdaq. Shares of Grapevine, Texas-based GameStop rose $2.10 to $23.71 on the New York Stock Exchange.