GameStop said on Sunday it was making a cash-and-stock bid to acquire eBay for about $55 billion, the latest in a series of audacious bets by GameStop’s chief executive, Ryan Cohen.
A video game and collectibles retailer that became a favorite among meme stock investors, GameStop said that it was offering $125 per share for eBay, paid half in stock and half in cash, and that it had planned to secure outside equity and debt financing.
The offer represents a roughly 20 percent premium to eBay’s share price before news of the potential bid was reported late Friday by The Wall Street Journal.
EBay confirmed receipt of GameStop’s offer on Monday, saying that it had no discussions with or outreach from Gamestop before receiving the proposal. “The board will review this proposal with a focus on the value to be delivered to eBay shareholders, including the value of the GameStop stock consideration and the ability of GameStop to deliver a binding, actionable proposal,” the company said in a press release.
Analysts are skeptical of the business strategy of combining a retailer like GameStop with eBay, a broad online marketplace. They also question how GameStop, which has about $9 billion in cash and a market capitalization of $11 billion, would be able to pay for an acquisition of eBay, which has a market capitalization of $46 billion.
“Without more details on proposed financing, we think the market would be skeptical of a potential deal’s feasibility,” analysts at Morgan Stanley wrote in a research note late last week.
On Sunday, GameStop said that it had already accumulated a 5 percent stake in eBay through stock and other securities and that the retailer had a “highly-confident letter” from the investment bank TD Securities to lend it up to $20 billion. A securities filing on Monday showed that Mr. Cohen’s stake is in derivatives, which means he would have less sway on the company’s decisions than if the stake was all in stock.
Mr. Cohen, who became chief executive of GameStop in 2023, has a strong following of retail traders who have helped boost the shares of the once flagging video game company. No traditional Wall Street analyst covers GameStop currently.
The founder of the e-commerce pet food company Chewy, Mr. Cohen has a track record of taking stakes in companies, creating drastic movements in their stock prices and collecting big profits. He revealed a 10 percent stake in Bed Bath & Beyond in March 2022, calling for several changes at the company and sending shares up as much as 70 percent. Five months later, he disclosed he had sold his stake, sending shares in the company spiraling.
In a news release detailing its bid on Sunday, GameStop said its 1,600 retail locations in the United States would provide eBay “a national network for authentication, intake, fulfillment, and live commerce.”
GameStop has proposed that Mr. Cohen would serve as chief executive of a combined company.
In recent months, eBay has been working on a turnaround, in seeking to fend off Amazon. EBay has refocused its business to attract younger shoppers looking for goods like trading cards or secondhand fashion. In February, the company announced it was acquiring Depop, a secondhand clothing app, for $1.2 billion.
Shares of eBay are up 137 percent since January 2024. “The business is firing on all cylinders,” analysts at Bernstein wrote. “Why disrupt things? The turnaround is working.”
