GameStop Takeover Rumor Without Merit

NEW YORK (TheStreet) -- Is GameStop(GME Quote) a possible takeover target for Best Buy(BBY Quote)? Not likely.

Rumors to this nature circulated on various today blogs, causing shares to rise nearly 4% on Monday to close at $25.59.

The rumor has reared its head several times in the past and never amounted to much. Analysts say the same is true this time around as Best Buy faces many of the same challenges as GameStop.

"GameStop will face challenges in a few years from the rise of digital downloads," Needham analyst Sean McGowan says. "I don't see why a retailer like Best Buy, facing the same challenge in video games, would increase its exposure to this risk."

There is also little to be gained from Best Buy picking up all of that real estate.

"I believe GameStop is a cheap stock that will generate enough cash in the next few years to justify a higher stock price, but that's not the same criterion a strategic buyer such as Best Buy would use to evaluate it as a takeover target," McGowan said.

-- Reported by Jeanine Poggi in New York

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