FTC offers no impediment to GameStop, EB merger

Waiting period expires with no comment from FTC; companies now seek OK from shareholders.

The game industry's two largest specialty retailers each issued statements today indicating that the waiting period imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired--with no objections to the merger being voiced by the Federal Trade Commission.

Such a move is a tacit stamp of approval from the federal government and clears the way for GameStop and Electronics Boutique to solicit votes from their respective shareholders, the last step in tying the knot first proposed April 18, 2005.

On that day, the companies announced they had signed a "definitive merger agreement" that would see GameStop buy out rival retailer Electronics Boutique.

Clearly, the move unites two power hitters, rather than one behemoth gobbling up a smaller, less-powerful competitor.

Last month, EB Games reported a spike in revenues for the quarter ending April 30, 2005 (its first quarter in fiscal year 2006). The company saw total revenues increase 36.2 percent to $507.1 million (from $372.4 million in the same period the year earlier). Comparable store sales rose 14.5 percent, with "double-digit gains in all markets and particular strength in European stores and domestic strip center locations."

At the time the acquisition was announced, it was EB's presence in Europe that many analysts said drove GameStop's interest.

For the same reporting period, the quarter ending April 30, 2005, GameStop also saw an increase in revenues and a jump in same-store comps. Overall sales increased 27.7 percent to $474.7 million, compared with $371.7 million in the same quarter the previous year, while comps were up 12 percent.

GameStop tallied $1.84 billion in sales during its last fiscal year, and Electronics Boutique reported $1.98 billion in sales during its most recent full fiscal year.

The two companies expect the merger to be completed sometime before the end of the year.

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