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THE GIST
A dying videogame retailer is planning a hostile takeover of the internet’s oldest marketplace. GameStop CEO Ryan Cohen has made an unsolicited $56 billion offer to acquire eBay and turn it into the next Amazon. Remember when Amazon started out as “the next eBay?”
WHAT HAPPENED
Ryan Cohen has $9 billion in cash and $20 billion in TD Bank financing, but instead of investing it in the next moonshot, he wants to dust off an old unicorn.
GameStop has built a roughly 5% stake in eBay, consisting primarily of derivatives alongside some common stock, and is offering $125 a share, split evenly between cash and GameStop stock. That’s a 20% premium to eBay’s Friday close and a 46% premium to its price on February 4, the day Cohen started quietly accumulating. Middle Eastern sovereign wealth funds are reportedly in the mix for additional firepower. eBay confirmed it received the offer on Monday and said its board would review it.
Cohen told CNBC’s Squawk Box on Monday morning that he hasn’t spoken to eBay’s management yet. “We are just starting,” he said, adding that the only viable approach to a deal like this is going directly to shareholders. The interview was, by multiple accounts, combative and at times awkward. Cohen repeatedly directed viewers to GameStop’s website for financing details, which is one way to handle a hostile takeover announcement on live television.
Cohen, to his credit, is not overselling the certainty here. “It’s ultimately either going to be genius or totally, totally foolish,” he told the WSJ. He also said he’d run a proxy fight if the board declines, would take no salary or cash bonus, and would be compensated solely on the performance of the combined company.
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The logic follows a familiar pattern. GameStop is no longer really a retailer. It’s a cash vehicle in search of a purpose, holding roughly $9.4 billion raised through convertible debt offerings while its actual business shrinks. Revenue fell 5% last year and has dropped from $5.27 billion in 2023. eBay isn’t distressed, but it isn’t thriving either: revenue grew just 6.5% over four years while net income fell 85%.
What eBay does have is a loyal seller base, strong international revenues, and a market cap nearly four times GameStop’s, which makes this a classic debt-fueled minnow-swallows-whale situation. Cohen’s pitch is straightforward: eBay is under-earning, fat can be cut, and earnings could potentially double under tighter cost controls. “When a business is not growing users and spending $2.5 billion in sales and marketing, there’s a lot of fat to cut,” he told CNBC. His longer-term target: “hundreds of billions of dollars” in market value.
When pressed on what evidence he has that he can grow a mature consumer business, Cohen pointed at GameStop itself. “Didn’t you guys call for GameStop’s demise multiple times?” he said on Squawk Box. “Look at our financial performance. Is it better than you guys anticipated?”
Ryan Cohen remains Ryan Cohen.
WHAT’S NEXT
eBay’s board response is expected within weeks. Cohen has pledged $2 billion in annual savings within 12 months of closing. The deal’s math depends heavily on GameStop stock holding its valuation long enough to close, which is its own category of risk. Sovereign wealth fund participation would help. GameStop shares fell about 1% Monday to $26.30.
Either way, Cohen is swinging. Whether eBay’s board hands him the bat is another question entirely.
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