GameStop Grows EU Ops With Micromania Buyout (GME)

GameStop (NYSE: GME) has reached a deal to make another video game chain acquisition.  It is in a definitive agreement to acquire Micromania.  This chain is France’s leading video game retailer with 332 locations throughout the country from private equity fund L Capital.  This is another key geographic add-on for GameStop.

What is interesting is that despite GameStop having locationsthroughout Europe, it really had no presence in France.  This isn’tgoing to be a massive addition to its total ranks when you consider it has5,557 combined retail stores throughout the United States and abroad in15 more countries, but it does fill a large hole in its EU presence.

The approximate $700 million deal after the assumption of debt issubject to regulatory clearance in the EU and is expected to close inNovember 2008.  GameStop is using cash on hand, a draw on its creditfacility, and via a committed term loan from B of A.

The company says this is part of its capital deployment to reach 25%earnings growth in 2009.  It also noted that this is expected to beimmediately accretive to earnings.

GameStop shares are up 0.5% at $34.40 in early indications today.  Its 52-week trading range is $32.80 to $63.77.

Jon C. Ogg
October 1, 2008