GameStop Makes Surprise Offer to Acquire eBay
GameStop announced Sunday that it has made an unsolicited, nonbinding offer to acquire eBay for $125 per share in a cash-and-stock deal, valuing the e-commerce platform at roughly $55.5 billion, reports CNBC. The offer, split evenly between cash and GameStop common stock, represents a 20 percent premium to eBay’s Friday close of $104.07, and a 46 percent premium to its closing price on Feb. 4, when the gaming retail giant started building a stake in the company, GameStop said in its statement.
Shares of eBay climbed about 5 percent on Monday to around $109, well below GameStop’s $125 offer, suggesting investors are skeptical the deal will close. GameStop’s current market value is just below $12 billion, while eBay’s is $46 billion. GameStop stock sank 10 percent.
GameStop CEO Ryan Cohen told CNBC on Monday that he hasn’t started any conversation with eBay’s management. eBay confirmed that it received the offer on Monday, and said its board would review it.
Total Retail's Take: GameStop made a largely unexpected offer to acquire eBay without prior discussions with the online marketplace. However, there are questions about GameStop's ability to finance the deal. While the retailer has lined up a $20 billion financing letter from TD Bank, the funding gap remains substantial. GameStop has accumulated roughly a 5 percent stake in eBay, according to Cohen, who delivered confident remarks during an interview with CNBC. “It makes us one of the largest shareholders. So they have a fiduciary duty to their shareholders to evaluate this proposal.” He also criticized eBay's current structure, calling it inefficient and claiming there's "a lot of fat to cut."
GameStop highlighted its focus on collectibles, trading cards and refurbished tech in its complete eBay proposal letter. The retailer's store staff already work in product authentication and could serve as a national fulfillment network for eBay drop-off and shipping nodes, per the proposal.
Cohen told The Wall Street Journal that he is prepared to take the offer directly to shareholders in a proxy fight if necessary. Should the deal close, Cohen is expected to serve as CEO of the combined company, according to GameStop’s statement.
In response to the acquisition offer, eBay emphasized the company's current positive momentum and appeared to hint that it takes a certain expertise to sustain this growth — perhaps expertise that GameStop does not have. The statement read: "With 135 million buyers across 190 markets, eBay operates a global, scaled marketplace that requires disciplined execution, deep domain expertise, and ongoing investment in innovation. Indeed, the eBay Board and leadership team are executing a focused strategy to drive sustainable growth and long-term shareholder value."
- Categories:
- Mergers & Acquisitions
- People:
- Ryan Cohen
Kristina Stidham is the digital content director at Total Retail and sister brands Women in Retail Leadership Circle and Women Leading Travel & Hospitality at NAPCO Media. She is passionate about digital media and handles video, podcast and virtual event production for all brands. You can often find her at WIRLC, TR, WLT&H or industry events with her camera and podcasting equipment—or at home on Zoom—recording interviews with thought leaders and business executives.
Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia. Go Owls! When she's not in the office, she loves to go on long walks, sing around the house, hangout with her family and two pet guinea pigs, and travel to new places.
