eBay’s shares jumped 6% on Monday after GameStop’s CEO, Ryan Cohen, made a bold offer to acquire the company for $56 billion, stating his intention to transform eBay into a business “worth hundreds of billions of dollars.”
Following this news, eBay’s valuation climbed to approximately $48.8 billion. In contrast, GameStop’s stock fell over 8%, reducing its market cap to less than $11 billion, which places it significantly below the target acquisition price.
GameStop’s non-binding proposal included an offer of $125 per share in cash and stock, representing about a 20% premium over eBay’s closing price from Friday. Additionally, GameStop has discreetly acquired a 5% stake in eBay.
As of Monday, eBay’s stock was trading around $110 a share, reflecting investor skepticism regarding the likelihood of the deal’s success.
Cohen, who gained popularity with retail investors during GameStop’s rise as a “meme stock,” expressed to a publication that “eBay should be worth more and always will be worth more.”
“We envision eBay as a company potentially valued in the hundreds of billions,” Cohen noted, suggesting that eBay could become a real competitor to Amazon in the e-commerce realm.
GameStop announced that TD Securities has pledged up to $20 billion in debt financing for the proposed acquisition. Cohen also mentioned that, if the deal is finalized, “we will achieve $2 billion in annual cost savings within 12 months of closing.”
eBay’s board confirmed on Monday that it had received the proposal and was poised to review it.
The company stated, “The board will evaluate this proposal with an emphasis on the value for eBay stockholders, including the merits of GameStop’s offer and their capacity to present a binding and viable proposal.”
However, analysts have voiced doubts about the feasibility of this transaction, especially considering eBay’s recent positive trajectory.
Bernstein analysts remarked in a client note that “eBay itself is undergoing a turnaround and is making progress.” Still, they cautioned that volatility in areas like collectibles could complicate matters. They foresee substantial challenges in structuring this deal.
Bloomberg Intelligence analysts shared this skepticism, calling the deal “unlikely” to materialize.
They pointed out that a credible offer would entail significant dilution and carry considerable execution risks.
