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GameStop proposes $55.5bn takeover of eBay
Video game retailer GameStop has tabled an unsolicited $55.5 billion cash-and-stock offer to purchase e-commerce platform eBay, valuing the company at $125 per share-$20 above its Friday closing price on the New York Stock Exchange.
Offer details and financing
GameStop disclosed the bid in a Sunday statement, revealing it has secured a $20 billion debt commitment from TD Securities to help fund the transaction. The remaining balance would be covered through a mix of cash and GameStop shares.
If completed, the deal would create a combined entity led by GameStop CEO Ryan Cohen, who would forgo a salary, bonuses, or severance packages, tying his compensation solely to the merged company's performance.
Cost-cutting and strategic rationale
Cohen outlined plans to slash $2 billion in annual costs within a year of the acquisition, targeting eBay's sales and marketing budget for $1.2 billion in reductions. GameStop argued that eBay's high spending in this area had failed to attract proportionate user growth, despite the platform's widespread brand recognition.
The proposal also highlights GameStop's 1,600 U.S. retail stores as a potential asset for eBay's "live commerce" and other operations, addressing a gap in eBay's physical footprint.
Market reaction and analyst skepticism
News of the bid sent eBay shares surging over 13% in after-hours trading, while GameStop's stock rose approximately 4%. However, retail industry analyst Sucharita Kodali of Forrester Research dismissed the offer as problematic for eBay, citing the burden of GameStop's debt.
"It makes sense for GameStop because it could boost its valuation by aligning with a larger company like eBay. But we're not combining two strong businesses here."
Sucharita Kodali, Forrester Research
Background and leadership
Founded in 1995 as a niche marketplace for collectors, eBay now serves 136 million users globally. GameStop, meanwhile, has been reducing its physical store count but retains a significant retail presence.
Cohen, who took over as GameStop's CEO in 2023, has previously criticized the company's slow transition to e-commerce. His leadership follows the retailer's 2021 "meme stock" frenzy, driven by retail investors rallying behind heavily shorted stocks like GameStop, AMC Entertainment, and BlackBerry.
Next steps
GameStop has threatened to bypass eBay's board and take its offer directly to shareholders if the proposal is rejected. eBay has yet to respond publicly to the bid.
