Video game retailer GameStop announced Sunday it has made an unsolicited offer to acquire online marketplace eBay for approximately $56 billion in a cash-and-stock transaction, marking one of the most ambitious takeover attempts in recent corporate history.
The Wall Street Journal reports that GameStop is offering $125 per share for eBay in a deal structured as an equal mix of cash and stock, according to a letter sent by GameStop CEO Ryan Cohen to eBay’s board of directors. The proposed price represents a 20 percent premium over eBay’s closing stock price on Friday. Cohen has indicated he is prepared to bypass eBay’s board and take the proposal directly to shareholders if the offer is rejected.
The bid represents a bold move by GameStop, whose market capitalization stands at nearly $12 billion, to acquire eBay, which is valued at approximately $46 billion, nearly four times GameStop’s size. Such acquisitions of significantly larger companies are rare in corporate merger and acquisition activity and typically require substantial financing arrangements. GameStop has already established a five percent ownership stake in eBay through a combination of shares and derivatives, Cohen revealed in the letter.
Cohen outlined his vision for combining the two companies, telling the Journal that the merger would create substantial opportunities for earnings improvement and cost reduction. “It could be a legit competitor to Amazon,” Cohen said about the combined company.
In his letter to eBay’s board, Cohen projected that GameStop would eliminate $2 billion in annualized costs from eBay’s operations within the first year following the deal’s completion. He argued this would result in increased earnings per share for the combined entity. Cohen emphasized that GameStop’s network of approximately 1,600 physical locations across the United States would provide eBay with a national infrastructure for product authentication, intake, fulfillment operations, and live commerce capabilities.
The GameStop CEO expressed his determination to pursue the acquisition aggressively. “Ebay should be worth—and will be worth—a lot more money,” Cohen said in the interview. “I’m thinking about turning eBay into something worth hundreds of billions of dollars.” Cohen told the Journal he would be willing to launch a proxy fight to replace eBay’s board members if they prove unreceptive to his proposal.
GameStop has secured significant financial commitments to support the transaction. Cohen stated the company has obtained a commitment letter for approximately $20 billion in debt financing from TD Securities, a subsidiary of TD Bank. As of January 31, GameStop held about $9.4 billion in cash and liquid investments, according to Cohen’s letter. The cash portion of the deal would be funded through this existing cash reserve combined with third-party equity and debt financing.
Cohen has gained notoriety among retail investors as the “meme king” following his prominent role in the 2021 meme-stock phenomenon. His significant influence on social media and among individual investors has established his reputation for making bold and unconventional investment decisions that can significantly impact market movements.
Read more at the Wall Street Journal here.
Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.
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