GameStop officially initiated an unsolicited takeover bid for eBay at a price of about $56
billion in cash and stock after securing a commitment from TD Bank to provide $20 billion of debt financing to help secure the deal.
In a letter to investors sent on Sunday, GameStop CEO Ryan Cohen pledged to find $2 billion of annual savings within 12 months if the sale closes. GameStop
owns about a 5% stake in eBay. In the Proposal Letter, the company offered $125.00 per share.
"eBay spent $2.4 billion on Sales & Marketing in fiscal 2025 and added one million net
active buyers (134M to 135M)," the letter explains. "We will take $2 billion of annualized costs out within twelve months of close: $1.2 billion from Sales & Marketing, $300 million from Product
Development, and $500 million from General & Administrative. Since 2021, GameStop has gone from a $381 million net loss to $418 million of net income, with SG&A down ~$800 million (47%)."
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GameStop's Board unanimously supports this proposal, according to the letter. Cohen will serve as CEO of the combined companies, and plans to complete the deal without taking a salary, cash bonus,
and golden parachute.
"I will be compensated solely based on the performance of the combined company," according to the letter, which also states that GameStop has about $9.4
billion in cash and liquid investments, and long-term debt sits at about $4.2 billion convertibles at 0% coupon.
Baird Equity Research Analyst Colin Sebastian gives the deal a
“relatively low probability of success.”
Sebastian wrote in a research note published Monday that the “outcome is driven by financial engineering rather than operating
synergies.” It raises the risk of being competitive long term. He also believes Board approval is unlikely, and a “poison pill” defense may occur.
“We believe the core
issue is direction, not valuation; the proposal assumes eBay would pivot from a technology-led marketplace transformation to a cost-optimization model,” Sebastian wrote. “To us, this would
be a more practical option if either eBay had not returned to growth and/or shares had underperformed in recent years.”
Cohen's goal is to build a company that can compete with
Amazon.
“eBay should be worth, and will be worth, a lot more money,” Cohen told The Wall Street Journal. “I’m thinking about turning eBay into something
worth hundreds of billions of dollars.”
If eBay is not receptive to the proposal, Cohen told the
WSJ he would run a proxy fight and take the offer directly to its shareholders. The company's proxy materials shows that the window for shareholders to nominate director candidates at eBay
ahead of an annual meeting scheduled for this June has already closed.
Cohen wants to turn GameStop into a holding company and integrate eBay's services. He sees a way to link GameStop’s
brick-and-mortar stores with eBay’s online business, he told the WSJ. Stores could become locations to collect and authenticate items from eBay sellers, he said.
He also believes eBay
"should be doing more around live commerce, where brands sell directly to shoppers via real-time video streams," positioning the company as a "legit competitor to Amazon.”
eBay
has increased its push into advertising, live shopping, and AI-driven tools in
recent years. The company generated $581 million in total ad revenue during the past quarter, with $555 million coming from its own ad products -- a 33% year-over-year increase.