GameStop Corp., the video-game retailer, agreed to sell its AT&T wireless stores to Prime Communications LP for $700 million, exiting a business that the company once viewed as a key source of future growth.
The sale of Spring Mobile, with 1,289 stores, is expected to close by the end of January, Grapevine, Texas-based GameStop said. Proceeds from the sale may be used to reduce debt, repurchase shares or be reinvested in the company’s core video-game business. The retailer continues to evaluate strategic options to boost its share price.
Shares of GameStop rose as much as 18 percent in New York, the biggest intraday gain in more than 13 years, before retreating somewhat. The stock was down 32 percent this year.
The world’s largest independent video-game retailer is retreating from a diversification strategy that led it to buy up wireless stores to insulate itself from shrinking brick-and-mortar sales of games like Call of Duty.
Through a series of acquisitions, GameStop became the largest owner of AT&T wireless stores, a title that now passes on to Sugar Land, Texas-based Prime. The company continues to expand into collectibles.
GameStop’s strategy faltered after AT&T changed its compensation for resellers last year, crimping earnings.
That led to a power struggle between executives who favoured diversification and those who believed the company should focus on its core business of video games.
Chief Executive Officer Michael Mauler stepped down after just three months on the job in May. The company announced the review of its business shortly thereafter and hasn’t named a permanent successor.