GameStop has launched an ambitious $56 billion unsolicited bid to acquire eBay, a move that would combine the video game retailer with the e-commerce giant. CEO Ryan Cohen proposed a half-cash, half-stock deal valued at $125 per share, representing a 20% premium over eBay’s recent closing price. Despite eBay being nearly four times the size of GameStop by market capitalization, Cohen is prepared to bypass the board and take the offer directly to shareholders if his proposal is rejected.
To finance this massive undertaking, Cohen has already secured a $20 billion debt commitment from TD Securities and plans to utilize GameStop’s $9.4 billion in cash reserves alongside potential backing from third-party investors, including Middle Eastern sovereign wealth funds. The retailer has already quietly amassed a 5% stake in eBay through shares and derivatives. Cohen believes the merger could create a legitimate competitor to Amazon by leveraging GameStop’s 1,600 physical locations as a national network for eBay’s fulfillment, authentication, and live commerce operations.
The proposal includes a plan to slash $2 billion from eBay’s annual costs within the first year, a strategy Cohen argues will significantly boost earnings per share. Under the proposed structure, Cohen would lead the combined entity as CEO. This bold maneuver reflects his reputation for unconventional, market-moving bets, which began when he steered GameStop through the 2021 meme-stock frenzy and eventually pushed the company back toward profitability through aggressive cost-cutting.
While GameStop has struggled with a 14% revenue decline due to the industry’s shift toward digital downloads, eBay has shown resilience, recently forecasting strong quarterly growth driven by its collectibles and automotive segments. This acquisition attempt represents a major departure from traditional merger and acquisition strategies, as GameStop attempts to swallow a much larger competitor to pivot its business model and vastly increase its market value.
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