(Adds valuation, details on offer, CEO comment)
By Freya Berry
LONDON May 19 Video game retailer GAME Digital
plans to float its shares on the London Stock Exchange
in a listing that two sources familiar with the matter said
could value the chain at around 400 million pounds ($673
GAME, which is controlled by U.S. restructuring hedge fund
Elliott Advisors via an investment vehicle, said on Monday it
would raise net proceeds of around 12 million pounds from the
sale of new shares and would target a "free float" of readily
tradeable shares of around 35 percent.
That would indicate an offer size of around 140 million
pounds in total, in a deal which marks a significant turnaround
for the retailer which fell into administration in 2012. Elliott
Advisors specializes in firms undergoing restructuring and
The chain, which has 560 stores and a database of over 19
million customers, also plans to use the offering to raise its
profile. It will issue 2 million pounds of "virtual" shares to
18,000 of its loyalty programme members, which gamers can
exchange for reward points.
"We're a business based on community. We wanted to make sure
we had something in place for both our stores and our most
engaged customers," said Chief Executive Martyn Gibbs.
Gibbs added the company has 16 million reward card
customers, behind only supermarket group Tesco and
drugstore chain Boots.
Faced with stiff competition from online retailers such as
Amazon, GAME has sought to differentiate itself in
order to compete through increasing its online presence,
launching a smartphone app and enabling flexible payment
The chain said 54 percent of new content purchases in the UK
were made through methods such as gift cards, reward points and
exchanging new games for old, rather than debit or credit cards.
GAME said it had a 33 percent share of the retail video
games market in the UK last year. The UK and Spanish video games
market were estimated to be worth 4.7 billion pounds in 2013.
Canaccord Genuity is advising the deal, while HSBC
and Liberum Capital are joint bookrunners.
($1 = 0.5942 British Pounds)
(Editing by David Holmes)