Dixons to take 12.5% stake in Gameplay

Dixons, the high street retailer, said yesterday it would take an equity stake in Gameplay.com, the online games seller, as the two groups co-operate to try to boost sales of computer games.

Dixons, the high street retailer, said yesterday it would take an equity stake in Gameplay.com, the online games seller, as the two groups co-operate to try to boost sales of computer games.

The deal will lead to the re-branding of Dixon's loss-making @jakarta stores, which sell computer games, under the Gameplay name. It will also allow Gameplay to offer its products through Freeserve, the internet service provider 80 per cent held by Dixons.

Mark Bernstein, Gameplay chief executive, said: "We don't want to be big retailers. If we had wanted that, we would be talking to Electonics Boutique."

Dixons will receive 6.8 million new shares in Gameplay worth £14.7m, and subscribe £5m for a further 1.8 million shares at £2.71 a share. The move will leave Dixons with a 12.5 per cent share in Gameplay, which it couldraise to 22.5 per cent throughoptions, plus pay-offs in shares if performance targets are met.

Dixons has seven @jakarta outlets selling computer games, in a turbulent retail sector. The stores will continue to be run by Dixons management.

Nick Wood, general manager of @jakarta, said: "We went into it on a bit of a high. It has not had the rate of growth that we expected." In the year to 29 April, the @jakarta chain posted losses of £2.6m on sales of £6.5m.

Analysts said the link-up was of little significance to Dixons' wider performance, which is bound up with the future of Freeserve, the UK's leading Net service provider. Dixons has been trying to offload its holding in the ISP to enable Freeserve to compete more effectively, and to bring more stability to Dixons' share price.Gameplay shares rose 8.5p to 226p yesterday, while Dixons fell 7p to 238p.