At $56 billion: Gamestop is trying to swallow eBay

According to the proposal, Gamestop is offering $125 per share, half in cash and half in stock, which reflects a premium of about 20% over eBay’s last closing price. This is a relatively unusual move, especially considering that until a few years ago Gamestop was a relatively marginal stock, which leapt into consciousness during the meme stock frenzy.

eBay’s value is nearly four times its own. Despite this, the company has already built a position of about 5% in eBay through shares and derivatives, according to Cohen. Cohen, who is also Gamestop’s largest shareholder, the connection between the companies can generate significant synergy.

Want to compete with Amazon

According to Cohen, combining the activities of the two may even make them a real competitor of Amazon, while improving profitability and cutting costs. Cohen even claimed that approximately $2 billion could be cut from eBay’s annual costs within a year of completing the deal, a move that should lead to an increase in earnings per share.

Cohen aims to turn a network of about 1,600 stores in the US into a physical infrastructure for eBay, product verification, reception, shipping and even live trading, and to turn eBay into a company worth “hundreds of billions”, while cutting costs and improving profitability. His reputation as the one who led the wave of meme stocks gives him backing among retail investors, but also emphasizes that this is an unconventional move with risk.

Such deals usually rely on heavy leverage and the issuance of shares, that is, a bet that the merged company will generate profits that will justify the price. Cohen claims that he has already secured financing commitments, including about $20 billion in debt, and is even considering adding external investors such as wealth funds from the Middle East.

This move connects to Cohen’s broader attempt to make a turnaround for Gamestop since 2021, moving from physical retail to a digital world, after the company soared during the hype period but still faces structural erosion (including a 14% drop in revenue in the last quarter). On the other hand, eBay is coming from a more stable place, with positive revenue forecasts and growth in areas such as collectibles and live sales.