GameStop has made a surprise offer to buy eBay in a deal worth about $56 billion, a move that could reshape the online shopping and gaming retail market if it goes through.
The company said on Sunday that it wants to buy all common shares of eBay for $125 per share. The offer would be paid through a 50-50 mix of cash and stock. Based on eBay’s Friday closing price, the bid represents a premium of around 20%.
GameStop CEO Ryan Cohen, who is also the company’s largest investor, said combining GameStop and eBay could create big opportunities to cut costs, improve earnings, and build a stronger competitor to Amazon.
The offer is unusual because GameStop is much smaller than eBay. GameStop has a market value of nearly $12 billion, while eBay is valued at about $46 billion. For a company of GameStop’s size to target a much larger business, it would likely need major debt financing, stock issuance, or support from outside investors.
Cohen said he has already lined up financial commitments, including about $20 billion in debt from TD Bank. He may also seek support from external investors, including Middle Eastern sovereign wealth funds, to help fund the deal.
According to the Wall Street Journal report, Cohen is prepared to take the offer directly to eBay shareholders and launch a proxy fight if eBay’s board does not support the proposal.
Cohen believes eBay has much more room to grow. He said GameStop stores could be used as physical locations for collecting and authenticating items sold by eBay sellers. He also said eBay should push harder into live commerce, where sellers and brands promote products through real-time video streams.
The bid comes at a time when GameStop is still dealing with pressure from digital game sales and the shift away from traditional retail stores. The company recently reported a 14% drop in fourth-quarter revenue.
eBay, meanwhile, has shown stronger momentum. The company recently gave a second-quarter revenue forecast above Wall Street expectations, supported by demand for collectibles, motor accessories, and live-streamed auctions.
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If the deal is completed, Cohen said he would become CEO of the combined company.
