GameStop Corp. is proposing to buy eBay Inc. for about $56 billion in cash and stock, a bold attempt by Ryan Cohen to take over a storied e-commerce name several times larger.
The gaming retail chain offered $125 per share in cash and stock for the online retailer, or about a 20% premium to its Friday close. GameStop, which built a roughly 5% stake in eBay, said it’s secured a commitment from TD Bank to provide about $20 billion of debt financing to help bankroll the deal. In a letter to investors Sunday, Cohen’s company pledged to find some $2 billion of annual savings within 12 months of a deal closing.
The takeover bid caps the surprising ascent of GameStop, a chain of video game outlets that has shrunk its brick-and-mortar footprint as gamers increasingly purchase software in digital stores. In 2021, it became the center of a retail-investor frenzy. Michael Burry, the Scion Asset Management head who rose to prominence after a winning wager against mortgages ahead of the 2008 financial crisis, fueled 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. EBay was much larger at around $46 billion, though the game retailer has about $9 billion in cash.
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 been pushing collectibles and used goods on its own marketplace, creating a business overlap.
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“EBay should be worth — and will be worth — a lot more money,” Cohen told the Wall Street Journal. “I’m thinking about turning eBay into something worth hundreds of billions of dollars.”
The CEO earlier told the paper he’s prepared for a proxy fight and will take the offer to shareholders if necessary.
Cohen has set ambitious goals for himself. In January, the company unveiled a compensation package that would reward him with options on over 171 million shares if he lifted 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.”