GameStop has made an unsolicited offer to acquire eBay for approximately $56 billion, according to multiple reports. The proposal, announced on Sunday, values eBay at $125 per share in a cash-and-stock deal, representing a premium of about 20% over eBay's Friday closing price.
Key Takeaways
GameStop has proposed acquiring eBay for approximately $56 billion in a cash-and-stock deal. CEO Ryan Cohen outlined plans to cut costs and leverage GameStop's physical stores for eBay's operations. The offer represents a premium of about 20% over eBay's recent stock price.
- GameStop offers $125 per share for eBay, valuing it at around $56 billion
- CEO Ryan Cohen plans to cut $2 billion in annual costs within a year
- GameStop has built a 5% stake in eBay and secured $20 billion in debt financing
- The combined company would aim to compete with Amazon
- eBay's board has not yet responded to the offer
The offer comes from GameStop CEO Ryan Cohen, who is also the company's largest investor. In a letter to eBay's board, seen by Reuters and HuffPost, Cohen outlined plans to cut $2 billion in annual costs within 12 months of the deal closing. He suggested that these cost reductions would significantly increase the combined company's earnings per share.
The proposal includes using GameStop's approximately 1,600 U.S. retail stores as a network for authentication, intake, fulfillment, and live commerce capabilities for eBay. Cohen told the Wall Street Journal that putting eBay and GameStop under one roof would create huge opportunities to improve earnings and cut costs, potentially making the combined company a legitimate competitor to Amazon.
GameStop has already built up a 5% stake in eBay through shares and derivatives, according to Reuters. The company has also secured a commitment letter for about $20 billion in debt from TD Bank, with potential backing from external investors including Middle Eastern sovereign wealth funds. Cohen indicated he is prepared to pursue a proxy fight if eBay's board is not receptive to the proposal.
EBay did not immediately respond to requests for comment on GameStop's offer. The potential deal would upend the usual M&A playbook, as it is rare for a company to target one nearly four times its size. Such deals typically rely on substantial debt, stock issuance, or both, banking on future earnings of the combined company to justify the cost.
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