GameStop stuns everyone with a significant multi-billion dollar offer to acquire eBay.
The favored meme stock has made an unsolicited bid of $56 billion to acquire the e-commerce giant.
GameStop has proposed an unsolicited cash-and-stock bid to buy eBay, valued at approximately $56 billion, targeting a company that is nearly four times its own size. CEO Ryan Cohen revealed the offer in a letter to eBay’s board and is reportedly ready to present the bid directly to shareholders if the board is unresponsive.
The structure of the deal
According to Reuters, the proposal values eBay at $125 per share, offering roughly a 20% premium over the company's closing price last Friday, structured as an even split of 50% cash and 50% stock. Cohen confirmed that GameStop has already acquired around a 5% stake in eBay through shares and derivatives.
To fund the acquisition, Cohen mentioned that he has obtained a commitment letter from TD Bank for about $20 billion in debt financing. He also noted that he might pursue additional capital from outside investors, including sovereign wealth funds from the Middle East.
The presentation: a genuine competitor to Amazon
Cohen presented the acquisition as a transformative opportunity, asserting that a merged GameStop and eBay could emerge as a significant competitor to Amazon. "It could be a true challenger to Amazon," he stated. "eBay should—and will—be worth much more money. I envision turning eBay into an entity valued in the hundreds of billions of dollars."
As part of his vision, Cohen suggested that GameStop's physical retail stores could function as drop-off and authentication centers for items sold by eBay sellers. He also pointed out the untapped potential in live commerce and real-time video shopping experiences as areas for growth for eBay.
If the acquisition goes through, Cohen expressed his intention to assume the role of CEO of the new company. He warned that if eBay's board does not respond favorably to the proposal, he is prepared to take the offer directly to shareholders via a proxy battle.
This move represents a bold strategic shift for GameStop, a traditional brick-and-mortar video game retailer that has seen better days. The company gained fleeting notoriety during the meme-stock excitement of 2021 and currently has a market capitalization of about $12 billion, in contrast to eBay's estimated $46 billion.
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GameStop stuns everyone with a significant multi-billion dollar offer to acquire eBay.
GameStop's CEO Ryan Cohen aims to acquire eBay for $56 billion and indicates he is prepared to challenge shareholders if eBay's board does not heed his proposal.