The founder of Sports Direct, Mike Ashley, has added a near 26% stake in the struggling video games retailer Game Digital to his string of high street investments.
Game Digital said Sports Direct, controlled by the billionaire, had acquired 44m shares, amounting to a 25.75% stake. Game released a profit warning last month due to a supply shortage of Nintendo’s Switch console and a weaker lineup of new games.
Ashley has built up a business empire by buying stakes in Debenhams, French Connection and the home shopping company Findel, through Sports Direct or investment vehicles.
Game said in a statement to the London Stock Exchange that it was aware Sports Direct had taken “significant strategic equity stakes in a number of retail and brand businesses across both the UK and US”, and that it was “pleased that the strategic value of the group has been recognised by Sports Direct”.
It added: “The group looks forward to working collaboratively with Sports Direct to explore the clear opportunities that a constructive partnership and collaboration can deliver for all stakeholders in the gaming, live events and rapidly growing eSports markets in which it operates.”
Game shares rose by more than 15% to 28p on the news, and later traded at 26.5p (up 9.3%), giving it a market value of £47m.
Its shares dived to 21p after the recent profit warning. Game, which has 580 shops in the UK and Spain, has pushed into events and the rapidly growing eSports market, as shopping shifts online and some game developers sell directly to consumers. ESports will be an official medal sport at the 2022 Asian Games in China.
The stake acquisition will fuel speculation that Sports Direct could pounce on Game with a takeover offer.
Sports Direct, Britain’s second-biggest sports retailer, has been under fire over its working practices since a Guardian investigation revealed that it was in effect paying warehouse staff less than the minimum wage. A report by MPs later accused Ashley of running Sports Direct like a Victorian workhouse.
The tycoon, who owns Newcastle United, is also embroiled in a high court dispute, which has heard evidence about his “unorthodox” business practices.