Videogame retailer GameStop Corp. said on April 18 it would buy competitor Electronics Boutique Holdings Corp. for $1.44 billion in cash and stock, creating a company that would rival Wal-Mart in game

(Reuters) -- Videogame retailer GameStop Corp. said on April 18 it would buy competitor Electronics Boutique Holdings Corp. for $1.44 billion in cash and stock, creating a company that would rival Wal-Mart in game sales.

Shares in Electronics Boutique jumped 32%, making it the top net gainer on Nasdaq, while GameStop rose 6%, among the top percentage gainers on the New York Stock Exchange.

The combined entity would have more than 3,200 stores in the United States and 600 stores internationally, with annual revenues approaching $4 billion and a dominant position in the growing market for used game sales.

The videogame industry is preparing for a rocky transition as it moves from one generation of game console to a newer, more advanced model. That changeover is expected over the next 18 months, and such changes have historically led to fluctuating sales.

Michael Pachter, an analyst with Wedbush Morgan Securities, called the acquisition a "nice deal" that would probably be approved by the Federal Trade Commission. The agency will review antitrust implications of the transaction, which the companies hope to close before Labor Day.

Pachter suggested the combined company would have a market share of about 25%, while Banc of America Securities analyst Gary Cooper pegged the combined share at about 21% to 22%, roughly equal to Wal-Mart Stores Inc. in terms of game sales.

GameStop said its chairman/CEO Richard Fontaine and COO Daniel DeMatteo would keep those jobs at the combined company. GameStop executives said there would be no significant branding changes this year.

Shareholders representing about 47% of Electronics Boutique's voting shares have pledged support for the deal, GameStop said.

Both Electronics Boutique and GameStop suffered last holiday season because of shortages of console hardware. The situation has eased somewhat for Sony Corp.'s market-leading PlayStation 2, but is seen continuing for the Xbox video game console. Microsoft Corp. is widely expected to release an Xbox successor later this year.

Analysts said the combination of Electronics Boutique and GameStop could counteract some of the uncertainty of the next-generation launches.

"Looking further out into the next-generation of consoles, having a unified, solid videogame specialty retailer could benefit the videogame software publishers simply because they will be able to tailor to the early adopter, hard-core crowd," American Technology Research analyst P.J. McNealy said in a note.