GameStop Corp. has proposed acquiring eBay Inc. for approximately $56 billion in cash and stock, a bold attempt by Ryan Cohen to take over an e-commerce giant several times larger than the video game retailer.
Offer Details
The gaming retail chain offered $125 per share for the online marketplace, representing about a 20% premium over eBay's Friday closing price. GameStop, which has built a roughly 5% stake in eBay, stated it has secured an initial, non-binding highly confident letter from TD Bank to provide approximately $20 billion of debt financing. In a memo to investors on Sunday, Cohen's company pledged to find some $2 billion in annual savings within 12 months of closing the deal.
Market Reaction
eBay stock surged about 10% in pre-market trading in New York on Monday, though it traded at around $114 — substantially below the offer value — indicating investor skepticism about the deal's completion. GameStop shares remained largely unchanged.
Background
The takeover bid follows GameStop's surprising ascent. Once a struggling chain of video game outlets, it became the center of a retail-investor frenzy in 2021. Michael Burry, the Scion Asset Management head known for his winning bet against mortgages before the 2008 financial crisis, helped fuel GameStop's rally by taking a bullish stance on the firm around 2019.
Cohen is now proposing to take over a company roughly four times larger than the retail chain he operates. GameStop had a market value of $12 billion as of Friday, while eBay was much bigger at around $46 billion. However, the game retailer has about $9 billion in cash. The takeover offer is split evenly between cash and GameStop common stock.
Business Overlap and Challenges
Both companies have struggled to adapt to changing consumer preferences. GameStop has shut stores and emphasized collectible toys and trading cards as more video games are purchased online. eBay has also been pushing collectibles and used goods on its marketplace, creating a business overlap.
About 136 million shoppers globally made purchases on eBay in the 12-month period ending March 31, spending approximately $80 billion annually on the marketplace.
"eBay itself is in the midst of a turnaround — one that is going well," Bernstein analysts wrote. "But to the extent there are any challenges or volatility from categories like Collectibles, this could put further strain on the math. We see real challenges to structuring this deal."
Next Steps
eBay representatives declined to comment. Chief executive Jamie Iannone was scheduled to meet with Bloomberg News on Monday, but a company representative contacted Bloomberg on Sunday to cancel the meeting, citing changed travel plans.
GameStop's Cohen told the Wall Street Journal he is prepared for a proxy fight and will take the offer to shareholders if necessary. "eBay should be worth — and will be worth — a lot more money," he said. "I'm thinking about turning eBay into something worth hundreds of billions of dollars."
Cohen has set ambitious goals. In January, the company unveiled a compensation package that would reward him with options on over 171 million shares if he lifts GameStop's market value to $100 billion. In Sunday's statement, Cohen said he would take over a combined entity but get paid solely based on the performance of that firm.
"Though the companies overlap in collectibles and resale, we see low probability of a deal," Bloomberg Intelligence analysts Poonam Goyal and Sydney Goodman said in a note on Friday. "Any credible offer would require substantial dilution and introduce meaningful execution risk."
