US videogame retailer GameStop (GME.N) has launched an unsolicited proposal to acquire online marketplace eBay Inc (EBAY.O) for approximately $56 billion in a cash-and-stock transaction. GameStop, which primarily sells video games, consoles, and accessories through its retail stores, is offering $125 per share, split evenly between cash and stock. This represents a premium of around 20% based on eBay’s closing price last Friday. eBay, a prominent online marketplace, facilitates consumer and business sales via its website. GameStop CEO Ryan Cohen is prepared to present the bid directly to shareholders if eBay’s board is unreceptive.
This ambitious buyout attempt targets a company nearly four times GameStop’s $12 billion market capitalisation, with eBay valued at about $46 billion. Mr. Cohen, GameStop’s largest investor, envisions boosting earnings and cutting costs, targeting $2 billion in annualised savings from eBay within 12 months post-acquisition. He believes the combined entity could compete with Amazon, leveraging GameStop’s 1,600 US locations to provide eBay with a national network for authentication, fulfilment, and live commerce. GameStop has already amassed a 5% stake in eBay through shares and derivatives.
To finance the offer, GameStop plans to use its existing $9.4 billion in cash and liquid investments, alongside a commitment letter for $20 billion in debt from TD Securities. Additional funding is anticipated from third-party equity and debt financing, including potential backing from Middle Eastern sovereign wealth funds. Mr. Cohen, known for bold market plays, has pledged to serve as CEO of the combined company. While GameStop grapples with industry shifts, eBay recently forecast strong second-quarter revenue. eBay has not yet publicly responded to Reuters’ requests for comment on the proposal.
