GameStop (GME) to sell its Spring Mobile division for $700 million to the Sugar Land, Texas-based Prime Communications. Spring Mobile unit owns and operates 1,289 AT&T wireless stores. The transaction is expected to close in the fourth quarter of fiscal 2018, subject to customary regulatory approvals and closing conditions. After this announcement, shares of GameStop surged more than 10% during the midday session.
The company said that the proceeds from the sale may be used to reduce its outstanding debt, fund share repurchases, reinvest in core video game and collectibles businesses to drive growth, or some combination of these options.
In June, the video game retailer confirmed that it is discussing with third parties regarding a potential transaction. The sale of Spring Mobile unit would generate immediate cash proceeds and enable the company to increase its focus on serving its customers’ entertainment needs across video games and collectibles.
“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 the board of directors.
The Grapevine, Texas-based company is set to report its third quarter 2018 earnings results on November 29. When GameStop reported its second quarter results in September, Dan DeMatteo said that the board is reviewing strategic and financial alternatives, including, but not limited to, a potential sale of the company.
Earlier this week, the company announced that it will start Black Friday weekend sales in its stores from Thanksgiving Day at 3 pm.
The stock, which plunged to a multiyear low ($12.14) on Tuesday, has given a negative return of 25% so far in this year and 20% in the past one year.