GameStop Corp. (NYSE: GME) today confirmed that Hestia Capital
Partners LP (“Hestia”), which owns approximately 160,000 shares of
GameStop common stock, provided notice of its intent to nominate
four individuals to stand for election to the Company’s Board of
Directors at GameStop’s 2019 Annual Meeting of Stockholders. The
Company’s 2019 Annual Meeting has not yet been scheduled and no
shareholder action is required at this time.
The Company issued the following statement:
GameStop welcomes open communications with its shareholders and
values constructive input toward the goal of enhancing shareholder
value. Over the past several weeks, members of GameStop’s Board and
the Company’s advisors have had extensive correspondence and held
multiple discussions with Hestia, Permit Capital and their
representatives to better understand their views.
GameStop Proposed Settlement Agreement Rejected by
Hestia and PermitGameStop approached discussions with
Hestia and Permit earnestly and in good faith. We offered to
nominate one of their proposed candidates and appoint an additional
independent director to the Board, in consultation with Hestia and
Permit. These two additions, in conjunction with the Board
appointments of George Sherman, our new Chief Executive Officer, in
April 2019, and independent director Carrie Teffner, in August
2018, would have resulted in the election of four new directors to
GameStop’s Board within approximately eight months. In order to
advance this effort and to avoid unnecessary expense and
distraction associated with a proxy fight, we asked Hestia to
provide names of proposed directors for Board consideration.
Despite our efforts to be constructive and responsive, Hestia and
Permit declined to provide information on director candidates,
other than Hestia managing member Kurt Wolf, and rejected our
proposal. GameStop remains open to reaching an agreement with
Hestia and Permit following additional discussions.
GameStop’s Board and Management Team Have Undertaken
Significant Actions to Drive Shareholder ValueThe
Company’s Board has been highly focused on effecting meaningful
change at GameStop in order to drive shareholder value. Over the
past year, GameStop, with the full support of the Board, has taken
a number of significant actions to enhance value for shareholders,
including:
- On March 21, appointed retail industry veteran George Sherman
as GameStop’s new CEO and a member of the Board, effective April
15, following a thorough search process conducted by the Board with
the assistance of a leading executive recruitment firm;
- On March 4, announced a new capital allocation plan focused on
increasing financial flexibility and strengthening the Company’s
balance sheet by redeeming in full the $350 million in unsecured
senior notes scheduled to mature in October 2019, and returning
capital to shareholders through a quarterly dividend declaration
and a new $300 million share repurchase authorization;
- Announced and completed the sale of our non-core Spring Mobile
division for approximately $735 million in cash; and
- Conducted a comprehensive review of strategic and financial
alternatives, in conjunction with financial and legal advisors,
which began in early 2018.
Most recently, on March 27, we announced several new strategic
partnerships in the esports space to help bring videogame culture
and consumer experiences to life. These include alliances with
Infinite Esports, Envy Gaming, Collegiate Star League and
Complexity Gaming, one of North America’s most elite and longest
standing esports organizations. One of many initiatives includes
opening the new GameStop Performance Center, an 11,000 square-foot
center housing a public gaming area for fans and sponsors.
GameStop is a leader in the video game industry, and its Board
and management team are committed to leveraging that leadership
position to discover new and unique ways to meet all of our
customers’ entertainment needs. With new leadership and a new
capital allocation plan in place, we are focused on implementing
several new strategic initiatives to drive sustainable growth and
profitability and deliver enhanced value to all shareholders.
GameStop’s Board comprises nine highly qualified directors,
seven of whom are independent and all of whom are proven leaders
with diverse experience across retail, gaming, technology,
entertainment, digital media and finance. The GameStop Board
regularly reviews its composition against the needs of the business
to ensure it has the right mix of skills and expertise, and is
currently evaluating candidates of its own, consistent with the
Board’s commitment to refreshment.
The Company, in consultation with its advisors, will review
Hestia and Permit’s notice of nominations to assess whether it
complies with the Company’s Amended and Restated Bylaws. Having
just received the notice of nominations, GameStop is unable to
confirm whether, as submitted, the nominations are in compliance
with the Company’s Amended and Restated Bylaws. The GameStop Board
will present its formal recommendation regarding director nominees
in the Company’s definitive proxy statement that will be filed with
the U.S. Securities and Exchange Commission and mailed to all
shareholders eligible to vote at GameStop’s 2019 Annual
Meeting.
Perella Weinberg Partners LP is acting as GameStop’s financial
advisor and Sullivan & Cromwell LLP and Pepper Hamilton LLP are
acting as its legal advisors.
About GameStopGameStop Corp., a Fortune 500
company headquartered in Grapevine, Texas, is a global,
multichannel video game and consumer electronics retailer. GameStop
operates over 5,800 stores across 14 countries. The company's
consumer product network also includes www.gamestop.com; Game
Informer® magazine, the world's leading print and digital video
game publication; ThinkGeek, www.thinkgeek.com, the premier
retailer for the global geek community featuring exclusive and
unique video game and pop culture products; and Simply Mac, which
sells the full line of Apple products, including laptops, tablets,
and smartphones and offers Apple certified warranty and repair
services.
General information about GameStop Corp. can be obtained at the
company’s corporate website. Follow @GameStop and @GameStopCorp on
Twitter and find GameStop on Facebook at
www.facebook.com/GameStop.
Safe HarborThis press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements
are based upon management’s current beliefs, views, estimates and
expectations, including as to the Company’s industry, business
strategy, goals and expectations concerning its market position,
future operations, margins, profitability, capital expenditures,
liquidity and capital resources and other financial and operating
information. Such statements include without limitation those about
the Company’s expectations for fiscal 2018 and 2019, future
financial and operating results, projections, expectations and
other statements that are not historical facts. All statements
regarding the Board’s review of strategic and financial
alternatives and expected costs and benefits, including whether
operating, strategic, financial and structural alternatives could
unlock value, and statements regarding expected benefits from
strategic partnerships, alliances and initiatives, are
forward-looking statements. Forward-looking statements are
subject to significant risks and uncertainties and actual
developments, business decisions and results may differ materially
from those reflected or described in the forward-looking
statements. The following factors, among others, could cause
actual results to differ from those reflected or described in the
forward-looking statements: the uncertain impact, effects and
results of the board’s review of operating, strategic, financial
and structural alternatives and the planned redemption of the $350
million in unsecured notes; volatility in capital and credit
markets, including changes that reduce availability, and increase
costs, of capital and credit; our inability to obtain sufficient
quantities of product to meet consumer demand; the timing of
release and consumer demand for new and pre-owned products; our
ability to continue to expand, and successfully open and operate
new stores for our collectibles business; risks associated with
achievement of anticipated financial and operating results from
acquisitions; our ability to sustain and grow our console digital
video game sales; the impact of goodwill and intangible asset
impairments; cost reduction initiatives, including store closing
costs; risks related to changes in, and our continued retention of,
executive officers and other key personnel; changes in consumer
preferences and economic conditions; increased operating costs,
including wages; cyber security events and related costs; risks
associated with international operations; increased competition and
changing technology in the video game industry; changes in domestic
or foreign laws and regulations that reduce consumer demand for, or
increase prices of, our products or otherwise adversely affect our
business; our effective tax rate and the factors affecting our
effective tax rate, including changes in international, federal or
state tax, trade and other laws and regulations; the costs and
outcomes of legal proceedings and tax audits; our use of proceeds
from the sale of our Spring Mobile business; and unexpected changes
in the assumptions underlying our outlook for fiscal 2018 and
fiscal 2019. Additional factors that could cause our results to
differ materially from those reflected or described in the
forward-looking statements can be found in GameStop's Annual Report
on Form 10-K for the fiscal year ended February 3, 2018 filed with
the SEC and available at the SEC's Internet site at
http://www.sec.gov or http://investor.GameStop.com. Forward-looking
statements contained in this press release speak only as of the
date of this release. The Company undertakes no obligation to
publicly update any forward-looking statement, whether as a result
of new information, future developments or otherwise, except as may
be required by any applicable securities laws.
Additional Information and Where to Find ItThis
filing may be deemed to be solicitation material in respect of the
matters to be considered at the Company’s 2019 annual meeting of
shareholders (the “2019 Annual Meeting”). In connection with the
2019 Annual Meeting, the Company plans to file with the Securities
and Exchange Commission (“SEC”) and furnish to the Company’s
shareholders one or more proxy statements and other relevant
documents. BEFORE MAKING ANY VOTING DECISION, THE COMPANY’S
SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT(S) IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE AND ANY OTHER DOCUMENTS TO BE
FILED WITH THE SEC IN CONNECTION WITH THE COMPANY’S 2019 ANNUAL
MEETING OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENTS
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY’S
2019 ANNUAL MEETING AND THE PARTIES RELATED THERETO. The Company’s
shareholders will be able to obtain a free copy of documents filed
with the SEC at the SEC’s website at http://www.sec.gov or the
Company’s website at http://investor.GameStop.com.
Participants in the SolicitationThe directors,
executive officers and certain other members of management and
employees of the Company may be deemed “participants” in the
solicitation of proxies from shareholders in connection with the
matters to be considered at the Company’s 2019 Annual Meeting.
Information regarding the persons who may, under the rules of the
SEC, be considered participants in the solicitation of the
shareholders of the Company in connection with the Company’s 2019
Annual Meeting will be set forth in the applicable proxy statement
and other relevant documents to be filed with the SEC. You can find
information about the Company’s executive officers and directors in
the Company’s Annual Report on Form 10-K for the fiscal year ended
February 3, 2018, the Company’s and such persons’ other filings
with the SEC and in the Company’s definitive proxy statement in
connection with the Company’s 2019 Annual Meeting when filed with
the SEC on Schedule 14A.
Investor Contact
GameStop Corp. Investor Relations
(817) 424-2001
investorrelations@gamestop.com
Innisfree M&A Incorporated
Art Crozier / Larry Miller
(212) 750-5833
Media Contact
Matthew Sherman / Aura Reinhard
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
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