Findel [2]: Game Digital to join Findel in Mike Ashley's 'sports retailing' stakes
Sports Direct International, the chain controlled by billionaire Mike Ashley, is said to have added a 25% stake in video game retailer Game Digital. Mr Ashley has previously expressed an interest in creating 'the Selfridges of sports retailing' and has acquired substantial stakes in Debenhams, French Connection and Findel through Sports Direct or personal investment vehicles.

 

The billionaire tycoon Mike Ashley has added a 25% stake in the video games retailer Game Digital to a high street shopping list that also includes Debenhams and French Connection.

Sky News has learnt that Sports Direct International, the chain controlled by Mr Ashley, is understood to have bought the stake in recent days.

A source close to Game Digital, which announced a profit warning last month because of a shortage in supplies of Nintendo's new Switch gaming console, said Sports Direct's purchase of the stake would be disclosed to the stock market this week.

It will be the latest move by the controversial Mr Ashley, who owns Newcastle United FC and has expressed an ambition to build a business empire upmarket enough to be dubbed 'the Selfridges of sports retailing'.

The tycoon, who has spent part of the last fortnight embroiled in a court case over allegations that he failed to honour a £15m payment to a former colleague, is thought to see opportunities in Game's presence in the fast-growing e-sports market.

Mr Ashley has orchestrated the acquisition of substantial stakes in Debenhams, French Connection and Findel, the home shopping retailer, through Sports Direct or personal investment vehicles.

The size of the shareholding being bought by Sports Direct will stoke speculation that Mr Ashley is planning a formal offer for Game - although he could choose to distance his company from such speculation through a formal statement that would rule out such a move for six months.

The billionaire made headlines last week when he gave evidence in a High Court case in which he ‎described his unconventional business methods, many of which include copious amounts of alcohol.

Sports Direct has already been under close scrutiny in the City following revelations about working practices at its warehouse in Shirebrook, Derbyshire.

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Mr Ashley has angered investors for refusing to bow to pressure to replace the company's chairman or appoint more independent board members.

His stake-building in other listed retailers, sometimes through complex financial derivatives‎, has also caused consternation in their boardrooms.

Game's shares closed nearly 23% higher on Wednesday at 24.25p amid speculation about higher-than-average trading activity.

The company has a market value of just £33.74m following a slump in the shares amid continued trading difficulties, including the recent profit warning.

Game trades from about 580 shops in the UK and Spain, and has sought to diversify into events, e-sports and other digital businesses as consumer trends shift shopping activity away from physical stores.

It has also been hit by the structural impact of game developers selling their products directly to consumers in order to disintermediate the profit-diluting involvement of third-party retailers.

Game's response has produced a degree of positive results, according to a statement last month.

"The board is pleased... by the initial performance of our new in-store gaming arenas, now trading out of 12 locations under the Belong banner," the company said on June 30.

Game added that it was also focused on cost reduction programmes and "significant efforts to reduce fixed and variable costs across the group's UK retail footprint, where we have over 220 lease events to manage by the end of 2018".

Sports Direct is thought to have acquired its 25% stake in Game from City institutions including Invesco.

About 40% of Game's shares are owned by Elliott Advisors, which engineered the public listing of the company's shares in 2014.

A Game spokesman declined to comment, while Keith Bishop, a spokesman for Sports Direct, did not respond to a request for comment.