Mergers and Acquisitions: GameStop Drops $56B Hostile Bid for eBay

GameStop made an unsolicited $56 billion offer to acquire eBay, threatening a proxy fight if rejected. The Silicon Review reports on the "snake-eating-elephant" M&A activity that could create a serious Amazon rival.

Mergers and acquisitions news took a dramatic turn on Sunday when meme stock icon GameStop submitted a non-binding proposal to acquire eBay for approximately 56billion, or 125 per share in a 50-50 cash and stock split.

GameStop CEO Ryan Cohen, who has led the company’s transformation since the 2021 retail frenzy, disclosed that his firm has already accumulated a roughly 5% stake in eBay. If the online marketplace’s board rejects the deal, Cohen is fully prepared to launch a proxy fight and take the offer directly to shareholders.

The bid values eBay at a 20% premium to its last closing price and a 46% premium to its value on February 4, the day GameStop began quietly acquiring shares. While GameStop has a market cap of only about 12 billion far smaller than eBay’s 46 billion Cohen has secured a commitment letter from TD Bank for 20 billion in debt financing to help bridge the gap. The company also holds roughly 9.4 billion in cash.

Cohen argues that combining GameStop’s physical store network with eBay’s online marketplace could cut 2 billion in annual costs within a year, largely by slashing eBay’s 2.4 billion sales & marketing budget. He envisions creating a legitimate competitor to Amazon, with GameStop’s 1,600 U.S. stores serving as authentication and fulfillment hubs for eBay sellers.

The deal would be one of the largest leveraged buyouts in tech history. Cohen would serve as CEO of the combined company, receiving no salary and taking compensation tied solely to performance.

As mergers and acquisitions news explodes with GameStop’s audacious $56 billion hostile bid for eBay, The Silicon Review examines whether the company once known for selling used video games can pull off the ultimate 'snake-eating-elephant' transformation and if Cohen’s threat of a proxy fight will force eBay’s board to the table.