Key Takeaways:
GameStop Corp. Chief Executive Officer Ryan Cohen has launched an unsolicited $56 billion bid to acquire eBay Inc., using a public campaign that includes selling collectibles on the auction site to promote the deal. The offer values eBay at $125 per share.
"I'm selling stuff on eBay to pay for eBay," Cohen said in a post on X, the platform formerly known as Twitter. The billionaire's eBay store features items like GameStop store signs and a signed Halo 3 flag, with each purchase including a copy of his letter to eBay's board.
The proposed acquisition faces significant financial hurdles, with GameStop’s market capitalization of around $12 billion standing in stark contrast to eBay’s $46 billion valuation. Cohen has secured $20 billion in debt financing from TD Bank and plans to use GameStop's approximately $9 billion in cash. GameStop, which already owns about 5% of eBay, may also issue more stock or seek outside funding to cover the remaining cost.
The news has been met with market volatility and skepticism. Shares of both GameStop (GME) and eBay (EBAY) rose after the initial report but have seen fluctuations since. Celebrity investor Michael Burry, known for his early investment in GameStop, announced he sold all his shares, citing concerns over the high levels of debt required for the deal.
Cohen's public tactics are characteristic of the executive dubbed the "Meme King" during GameStop's 2021 stock surge. The items listed on his eBay page have attracted bids totaling over $87,000, turning the takeover attempt into a form of public theater. His stated goal is to massively cut costs and turn the combined company into a "legit competitor to Amazon."
If the deal proceeds, Cohen would become CEO of the combined entity. He has a track record of radical change, having steered GameStop from a $381 million annual loss to a $418.4 million profit through aggressive downsizing, store closures, and layoffs. However, he has also stated he could pursue a proxy battle, taking his offer directly to eBay's shareholders if the board is not receptive.
This takeover bid represents a high-stakes gamble for Cohen, who has a compensation package that could pay him up to $35 billion if he achieves lofty valuation targets for GameStop. The move on eBay is what he previously termed a plan that would "ultimately either be genius or totally, totally foolish."
The success of this bid hinges on Cohen's ability to convince shareholders of a high-debt strategy that has already spooked major investors. The next move will likely be a formal response from eBay's board, which will determine whether the offer proceeds or escalates into a proxy fight for control of the company.
This article is for informational purposes only and does not constitute investment advice.
