GameStop Considers $56 Billion Acquisition of eBay in Ryan Cohen's Ambitious Resale Strategy

GameStop Proposes $56 Billion Acquisition of eBay

GameStop Corp. is reportedly planning to make a major move in the e-commerce space, with the Wall Street Journal citing sources close to the company as saying that GameStop is proposing to acquire eBay Inc. for approximately $56 billion in cash and stock. According to the Journal, GameStop Chief Executive Officer Ryan Cohen plans to offer $125 per share in cash and stock for the online retailer, representing a roughly 20% premium to eBay's Friday close.

The proposal is backed by a significant amount of debt financing, with TD Bank committing to provide approximately $20 billion in financing for the deal. GameStop has a roughly 5% stake in eBay and is expected to make its offer public later on Sunday, according to the Journal. This potential acquisition would see Cohen, the founder of pet supplies e-tailer Chewy, take control of a storied e-commerce name that is several times larger than the retail chain he currently operates.

For context, GameStop's market value as of Friday was approximately $12 billion, while eBay's market value was around $46 billion. However, GameStop has a significant cash reserve of $9 billion, which could help mitigate the financial risks associated with the acquisition.

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Analysts at Bloomberg Intelligence have expressed skepticism about the deal, citing the overlap between the two companies in collectibles and resale, as well as the potential for substantial dilution and execution risk. In a note published on Friday, analysts Poonam Goyal and Sydney Goodman stated that they see a low probability of a deal occurring.

Despite these concerns, Cohen has stated that he is prepared for a proxy fight and will take the offer to shareholders if necessary. This is not the first ambitious goal set by Cohen, who was rewarded with options on over 171 million shares in January if he can lift GameStop's market value to $100 billion.

The acquisition would come at a time when both companies have been struggling to adapt to changing consumer preferences. GameStop has shut stores and emphasized collectible toys and trading cards, while eBay has been pushing collectibles and used goods on its own marketplace, creating a business overlap.

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