GameStop, still working to right its business, announced Wednesday that it has entered into a definitive agreement to sell off its Spring Mobile business, which owns and operates 1,289 AT&T wireless stores, to Prime Communications for $700 million. The sale is expected to close in the fourth quarter of this fiscal year.
In June, GameStop confirmed it was in talks with private firms about a potential buyout.
“There can be no assurance any agreement will result from these discussions,” the news release stated at the time. “GameStop does not intend to make any additional comments regarding these discussions unless and until it is appropriate to do so.”
In announcing Wednesday’s deal, GameStop noted that its board of directors, together with outside financial advisors, is undertaking a comprehensive review of a wide range of strategic and financial alternatives to enhance shareholder value. The board said that it determined that the sale of Spring Mobile is in the best interest of the company and its shareholders. The sale, the company said, will give it cash which can be used to “increase its focus on serving its customers’ entertainment needs across video games and collectibles.”
The cash will be used to reduce the company’s outstanding debt, fund share repurchases, reinvest in core video game and collectibles businesses.
“This transaction enables GameStop to enhance our performance with an increased focus on the video game industry and the rapidly-growing collectibles space. These are areas where we have considerable experience and where we are well positioned to capitalize on our competitive position,” said Dan DeMatteo, executive chairman of GameStop’s board of directors. “Our board continues to review strategic and financial alternatives to enhance shareholder value and we look forward to providing an update on the process at the appropriate time.”
Perella Weinberg Partners LP is acting as financial advisor and Pepper Hamilton LLP is acting as legal counsel to GameStop in relation to the sale of Spring Mobile. J.P. Morgan Securities LLC and SunTrust Robinson Humphrey, Inc. are acting as financial advisors and Gibson, Dunn & Crutcher LLP is acting as legal counsel to Prime Communications.