Analyst predicts GAME takeover

In its report of the recent turbulence at UK retailer GAME, one analyst has predicted that the chain has become an increasingly likely target for a takeover – though this in turn should help protect its share price in the near term.

The real shock with the results was the departure of the group’s CEO and COO,” a report by analyst Collins Stewart reads. The short-term uncertainty spooked the market. But we believe that GAME now looks vulnerable to bid interest, which should provide support for the shares.

And we think that given the increasing complexity of the video games market, there will be benefits from new leadership in helping to build a more platform agnostic retail model.”

Collins Stewart also believes that while wider concerns about game are centred on the changing landscape of the video games retail market, it is more concerned about problems with its core structure.

The market has been concerned about the impact of technology shift on the video games market, but the real problems last year were more traditional,” the report added.

It was hit by aggressive pricing from supermarkets and problems in its overseas portfolio. International profits fell 74 per cent, and we estimate the French and Australian business lost circa 12m, masking strong profits from Spain.”