Video game retailer Gamestop has launched an unsolicited bid for e-commerce platform Ebay, valuing the company at $125 per share — a $20 premium over Friday's closing price in New York. The move is designed to create a stronger competitor to Amazon.
Details of the Offer
The all-stock proposal values Ebay at approximately $55.5bn. Gamestop's chief executive, Ryan Cohen, indicated he would take the offer directly to shareholders if Ebay's board rejects it. Cohen, who built his reputation as founder of online pet supplies retailer Chewy, has been working to reposition Gamestop as a rival to Amazon.
CEO Compensation and Cost Savings
Cohen proposed that he would become CEO of the combined entity and receive no salary, no cash bonuses, and no golden parachute. He stated he would be compensated solely based on the performance of the combined company. Additionally, around $2bn in cost savings would begin after the deal's completion. Gamestop has secured a commitment letter from TD Securities for approximately $20bn in debt financing to support the acquisition.
Strategic Rationale
Cohen has criticized Gamestop for embracing e-commerce too slowly and sees a path to make the combined company a much bigger competitor to Amazon. Gamestop, headquartered in Texas with a valuation near $12bn, maintains about 1,600 outlets in the US despite numerous closures. Cohen argued this physical network would provide Ebay with a national infrastructure for live commerce.
Background on Gamestop
In 2021, Gamestop became a meme stock after Reddit investors noticed hedge funds had heavily shorted the stock, leading to a coordinated buying effort that drove shares from $17 to over $480. This forced hedge funds to buy back shares at high prices, causing significant losses. Since becoming CEO in 2023, Cohen has steered Gamestop back to profitability through aggressive cost cuts.
