$55.5bn Shock: GameStop Targets eBay in Mega Bid

Video game retail chain GameStop announced on Sunday that it has submitted an unsolicited offer of $55.5 billion (£40.9 billion) to acquire the e-commerce company eBay.

In a statement, GameStop said that under this cash-and-stock proposal, each share of eBay is valued at $125—a premium of $20 over the stock's closing price in New York trading on Friday.

In a letter addressed to eBay, GameStop CEO Ryan Cohen stated that he plans to realize $2 billion in cost savings within the combined entity within one year of the deal's completion.

GameStop confirmed that Cohen would serve as the CEO of the newly formed company.

He would receive "no salary, no cash bonuses, and no golden parachute," and his compensation would be "based solely on the performance of the combined entity."

GameStop, currently valued at approximately $11.9 billion in the stock market, stated that it has secured a commitment letter from TD Securities for roughly $20 billion in debt financing to fund the transaction.

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The majority of the proposed cost reductions would target eBay's sales and marketing operations, where Cohen indicated plans to cut spending by $1.2 billion.

GameStop noted that despite significant spending in this segment of the business, the "globally recognized marketplace" has failed to generate substantial user growth.

Sucharita Kodali, a retail industry analyst at market research firm Forrester, remarked that the proposal does not appear to be a "very good deal," as it would saddle GameStop with eBay's existing debt.

For GameStop, however, the move is advantageous, as merging with a major entity like eBay could significantly boost its own valuation.

Kodali further added, "The reality is that we aren't necessarily bringing together two strong companies." On Friday, when news of this potential proposal emerged, eBay shares surged by more than 13% in after-hours trading.

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Although GameStop has closed many of its stores in recent years, it still maintains approximately 1,600 outlets across the United States.

Cohen stated that these stores would provide eBay with a nationwide network for its "live commerce" and other business operations.

Cohen, who became GameStop's chief in 2023, has criticized the company's sluggish pace in shifting toward e-commerce. During the Covid-19 pandemic, GameStop became the focal point of one of the most extraordinary stock market stories of recent years. This was largely due to the efforts of an investment influencer—Keith Gill, known as 'Roaring Kitty'—who helped drive up its share price.

GameStop's popularity among small investors during the pandemic gave rise to the concept of "meme stocks"—shares that garner public attention through platforms such as Reddit.

Often, the stocks that gained popularity were precisely those against which professional investors—such as hedge funds—had placed heavy bets.

Consequently, some of these stocks—including cinema chain AMC Entertainment and smartphone maker BlackBerry—experienced extreme price volatility. During this highly turbulent trading period, the prices of these shares fluctuated wildly.



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