GameStop Corp. (NYSE: GME) shares were crushed on Tuesday after the company announced that it would no longer be pursuing the sale of its business. Reading between the lines here, it appears that no one even wanted to buy this video game retailer.
GameStop’s board initiated this search in June 2018, together with outside financial and legal advisors. The board undertook a comprehensive review process, including discussions with third parties regarding a potential sale of the company.
GameStop’s board has now terminated efforts to pursue a sale of the company due to the lack of available financing on terms that would be commercially acceptable to a prospective acquirer.
As part of the review process, the company sold its Spring Mobile business. This transaction was completed on January 16, 2019, and generated roughly $735 million in immediate cash proceeds.
The board continues to evaluate the optimal use of these proceeds, which could include reducing the company’s outstanding debt, funding share repurchases, reinvesting in core video game and collectibles businesses to drive growth, or a combination of these options.
Separately, the board continues its search process to appoint a highly qualified, permanent CEO and it is working with a leading executive search firm.
Shares of GameStop were last seen down over 27% at $11.23, in a new 52-week range of $11.15 to $17.27. The consensus price target was $15.50.