GameStop makes $55.5bn takeover offer for eBay

GameStop has made an unsolicited $55.5 billion cash and stock offer to acquire eBay, valuing the e-commerce giant at $125 per share, which is $20 above its closing price on the previous Friday. The proposal, announced by GameStop’s CEO Ryan Cohen, includes plans to achieve $2 billion in cost savings within a year, primarily by cutting $1.2 billion from eBay’s sales and marketing expenses. Cohen would become the CEO of the combined company and has pledged to forgo salary, bonuses, and golden parachutes, instead tying his compensation to the new entity’s performance. GameStop, currently valued at around $11.9 billion, has secured a commitment for $20 billion in debt financing from TD Securities to support the deal. The offer has sparked mixed reactions, with some analysts questioning its attractiveness given the significant debt GameStop would assume. Retail industry expert Sucharita Kodali noted that while the deal could boost GameStop’s valuation by merging with a larger company, the combination does not necessarily unite two strong businesses. Despite this, eBay’s shares surged 13% in after-hours trading following the announcement, while GameStop’s stock rose by about 4%. Cohen highlighted the strategic value of GameStop’s approximately 1,600 U.S. retail locations, which could provide eBay with a physical network to support its live commerce initiatives and other operations. GameStop’s bid comes amid ongoing challenges for the company, which has been criticized for its slow transition to e-commerce since Cohen took over as CEO in 2023. The retailer gained widespread attention during the COVID-19 pandemic as a “meme stock,” driven by retail investors and social media influencers, notably Keith Gill, also known as Roaring Kitty. Meanwhile, eBay remains a significant player in online marketplaces, boasting 136 million users since its founding in 1995. The proposed acquisition represents a bold move by GameStop to reshape its future by leveraging eBay’s established platform and user base.