Meme stock GameStop makes $56 billion bid for eBay in bid to compete with Amazon
A sign is posted in front of eBay’s headquarters in San Jose, California.
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US video game retailer GameStop announced on Sunday that it has made an unsolicited, non-binding offer eBay for $125 per share in a cash-and-stock deal, valuing the e-commerce platform at about $55.5 billion..
The offer, split equally between cash and GameStop common stock, represents a 20% premium to eBay’s Friday close of $104.07, and a 46% premium to its Feb. closing price.. 4 – when the retail giant began building a stake in the company, GameStop said in a statement.
eBay shares rose as much as 13.4% in after-hours trading to around $118. GameStop, which became a so-called “meme stock” amid the 2021 sales frenzy that has benefited its shares the most, jumped nearly 4% to $27.6 per share.
The announcement came as GameStop Chief Executive Ryan Cohen told the Wall Street Journal that he sees a way to make the e-commerce company a bigger competitor. Amazon.com.
eBay
“EBay should deserve – and will deserve – a lot of money,” Cohen said. “I’m thinking of turning eBay into something worth hundreds of billions of dollars.”
GameStop built a roughly 5% stake in eBay and received a commitment letter from TD Bank for up to $20 billion in debt financing to make the deal possible, according to its statement. The remainder of the deal will be financed by an estimated $9.4 billion.
The proposal is subject to approval by eBay’s board of directors, regulators, and shareholders of both companies. EBay did not immediately respond to CNBC’s request for comment.
Both companies have struggled to adapt to changing consumer tastes, and it’s unclear whether eBay’s board will view GameStop — whose market capitalization reached nearly $11 billion before the news broke — as a credible acquirer for a company four times its size.
GameStop has a market value of $12 billion and eBay was the largest at about $46 billion, as of Friday, according to LSEG data, raising questions about the possibility of a bid.
Cohen told the Journal that he is willing to take the offer directly to shareholders in a proxy fight if necessary. If the deal closes, Cohen is expected to serve as CEO of the combined company, according to a GameStop statement.
In its offer, GameStop said it would cut $2 billion in annual costs within a year, targeting eBay’s sales and marketing budget, which will reach $2.4 billion in fiscal 2025 while operating consumer growth remains low at less than 0.75%.
“A large amount of money is not generating more users in a marketplace with a near-universal reputation,” the statement said.
The company said the cost cuts alone would increase eBay’s earnings per share, measured under US accounting rules, to $7.79 from $4.26 in the first year.
GameStop has also positioned its approximately 1,600 US retail stores as the virtual infrastructure of the eBay marketplace, providing a network of verification, pickup, fulfillment, and live trading capabilities.
Cohen first commented in January on plans to acquire a publicly traded consumer company larger than GameStop, telling CNBC at the time that the deal was “transformational” and “unprecedented in the history of the capital markets.”
