GameStop acquires French video games leader

GRAPEVINE, Texas GameStop announced that it has reached a definitive agreement to acquire Micromania, France’s leading video game retailer with 332 locations throughout the country. GameStop, which currently has no stores in France, will operate 5,889 locations worldwide in the United States, Canada, Australia, New Zealand and, with the Micromania acquisition, the European store count will top 1,077 stores located throughout France, Italy, Germany, Austria, Switzerland, Sweden, Norway, Denmark, Finland, Ireland, Spain and Portugal.

The transaction, for approximately $700 million (€480 million) in cash, including the assumption of debt, is subject to clearance by the European Commission and is expected to close in November. Under the terms of the agreement, GameStop will purchase virtually all of the outstanding shares of the company from private equity fund L Capital. GameStop intends to fund the transaction through cash on hand, a draw on its existing revolving credit facility, and a $150 million committed term loan from Bank of America.

“As we have accelerated our growth in Europe over the years, we have kept a close eye on the European retailers whose passion for the business is reflected in the quality of their stores and evident knowledge of their staff," stated GameStop executive chairman R. Richard Fontaine. "Micromania has been that type of retailer. When the opportunity arose to purchase Micromania, and after meeting the executives who lead the company, we became convinced that expanding into Europe’s second-largest video game market with Micromania’s management team and GameStop’s diverse experience was a great combination for profitable growth.”

“The transaction is a reflection of our belief that the European video game market is growing and will be an important part of GameStop’s worldwide growth," said ceo Daniel A. DeMatteo. “Historically, our most productive use of capital has, by far, been the addition of new stores whether opened organically or acquired. With the addition of Micromania, we have begun deployment of capital that we believe will help us achieve EPS growth of 25% or more in fiscal 2009, and set GameStop up for continued growth in the years to come. We expect this acquisition to be accretive to our fully-diluted EPS in both the fourth quarter of fiscal 2008 and fiscal 2009.”

Pierre Cuilleret, who will remain Micromania’s president directeur general, stated, “Micromania is a terrific brand. I am particularly pleased that the GameStop management team recognized the impassioned quality and importance of our sales advisors and senior managers. With GameStop as a partner, and with their history of seeking out new growth opportunities, I am very enthusiastic about our potential to expand the brand that has been built for over 25 years in France.”