February 12, 2018 / 8:07 AM / a year ago

Game Digital to open concessions in Sports Direct stores

FILE PHOTO: Mike Ashley, founder and majority shareholder of sportwear retailer Sports Direct, leads journalists on a factory tour after the company's AGM, at the company's headquarters in Shirebrook, Britain, September 7, 2016. REUTERS/Darren Staples/File Photo

LONDON (Reuters) - British computer games retailer Game Digital (GMDG.L) said on Monday it planned to open gaming areas in some Sports Direct (SPD.L) stores under a collaborative agreement with Mike Ashley’s sportswear group, an investor in the company.

Game said Sports Direct had bought a 50 percent stake in the intellectual property rights of its BELONG gaming zones for 3.2 million pounds ($4.4 million), and in return would take half of the unit’s future profits.

Shares in Game jumped 13 percent to 43 pence after the news, valuing the company at 73 million pounds.

Game said it launched BELONG just over a year ago, and it now had 19 in operation, giving gamers the opportunity to join other players on platforms like PS4 and Xbox One.

“We look forward to collaborating with Sports Direct to increase the availability and scale of BELONG and to capitalise on the increasing overlap between sports and esports fans by bringing this unique experience to a wider consumer base,” said Game’s Chief Executive Martyn Gibbs.

Sports Direct bought a 25.75 percent stake in Game Digital last July, shortly after Game issued a profit warning, partly because it could not get hold of enough Nintendo Switch consoles.

Analyst Adam Tomlinson at Liberum upgraded Game Digital to “buy” from “hold” on Monday, saying the new financing was an important step in Game’s ongoing transformation.

“The potential to locate both BELONGs and Game retail stores in Sports Direct stores also improves Game’s ability to optimise its UK store base, where 221 lease events are due to occur in 2018,” he said.

Sports Direct will also provide loan facilities of up to 55 million pounds to fund new venues for the arenas and to develop its website and related tournament management system, Game said.

Reporting by Paul Sandle; Editing by Sarah Young and Susan Fenton

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