Perhaps in an attempt to expand their Pokémon card-trading empire, video game retailer GameStop is trying to acquire e-commerce platform eBay. From surviving Covid on meme stock to banking on the Charizard Ultra Premium Collection, to potentially owning eBay — GameStop’s having quite the run.
On Sunday, May 3, GameStop made an offer to buy eBay for $125.00 per share, which comes down to about $55.5 billion in total. As eBay’s stock price closed at $104 USD on Friday, May 1, GameStop is offering a 20% premium per share. This whopping sum is to be paid 50% in cash and 50% in stock, as GameStop’s CEO Ryan Cohen explains in an open letter to eBay’s Board of Directors.
As stated by Cohen, GameStop already has a 5% economic stake in eBay. He goes on to mention that, since 2021, GameStop has gone from a $381 million net loss to $418 million net income, and should the bid be accepted, “GameStop’s ~1,600 US locations give eBay a national network for authentication, intake, fulfillment, and live commerce.” Cohen proposes himself as the CEO of the combined corporations.
In an interview with The Wall Street Journal, Cohen says he wants to turn eBay into a “legit competitor for Amazon.” If eBay’s Board of Directors is unreceptive to his plans, he won’t shy away from a proxy fight. EBay has not made any public statements concerning the offer at the time of writing.
The unbinding and unsolicited offer from GameStop may come as a bit of a surprise, given that eBay’s market value is estimated at $46 billion, whereas GameStop’s is around $12 billion. But the proposal is even more surprising considering GameStop’s financial struggles that culminated in the 2021 meme-stock madness, when Reddit users decided en masse to buy GameStop stock in an attempt to save the video game stores from going under.
GameStop may therefore not seem like the most reliable buyer for eBay, but Cohen has built his reputation on oversized bets and unpredictable shakeups of the market, so don’t dismiss this offer yet.
