GameStop prepares eBay takeover offer in Ryan Cohen’s boldest move yet; Stocks jump 15%
GameStop has been quietly building a stake in eBay ahead of a potential bid that could reshape online retail, as CEO Ryan Cohen pursues an audacious plan to turn the video game retailer into a $100 billion business.
GameStop Quietly Picks Up eBay Shares Ahead of Potential Bid
GameStop is preparing to make a bid for eBay early this month in what would be among the most ambitious corporate takeover attempts in recent retail history, according to people familiar with the matter.
The video game retailer, led by CEO Ryan Cohen, has been quietly taking a stake in eBay in preparation for a potential bid, sources say. eBay shares rose more than 15 percent in after-hours trading Friday. Wall Street Magazine‘s initial report on the planned proposal.
David and Goliath Deal: Chasing GameStop’s $12 Billion to $46 Billion Target
The scale of the proposed transaction is remarkable. GameStop’s market cap is approximately $12 billion, while eBay’s size is approximately $46 billion. If the deal goes ahead, it would represent one of the most asymmetrical acquisition initiatives in U.S. retail history.
Sources familiar with the matter said GameStop could submit its eBay bid later this month. Cohen could take the offer directly to eBay shareholders if eBay’s board is unsympathetic, one of the sources added. The exact financial terms of any potential offer are unknown.
Ryan Cohen’s $100 Billion Ambition Boosts His eBay Tracking
Ryan Cohen has made little secret of his intentions to make a transformative deal. In an interview in January Wall Street MagazineIt said it is actively evaluating potential deal targets, with a particular focus on the consumer and retail sector, as part of a broader strategy that will take GameStop well beyond its origins in video games and collectibles.
Ryan Cohen’s restructured compensation package earlier this year gives him a significant personal incentive to execute. Cohen will receive $35 billion worth of stock if certain performance benchmarks are met, including a requirement that GameStop’s market value reaches $100 billion, the Journal previously reported.
GameStop had about $9 billion in cash on its balance sheet at the end of March; That figure was up sharply from $4.8 billion a year ago, giving the company considerable firepower for a major acquisition.
Michael Burry Among Investors Supporting GameStop Acquisition Strategy
Ryan Cohen has the support of prominent investors who have publicly encouraged GameStop to devote its growing cash reserves to bold acquisitions. Among them is Michael Burry of “The Big Short,” whose bets against subprime mortgage bonds are described in Michael Lewis’ book. GameStop should use its cash pile to make transformative acquisitions, Burry wrote in his Substack newsletter.
GameStop’s shares are up around 30% so far this year; This partly reflects investors’ optimism about Cohen’s deal-making plans.
Why eBay: Overlapping Customers, Collectibles, and Strategic Logic
The potential rationale for a GameStop-eBay combination is based on overlapping customer bases and complementary product categories. eBay has spent recent years shifting its market toward collectibles and used items, categories closely aligned with GameStop’s existing customer base of video game enthusiasts and collectors.
eBay’s shares have risen more than 50% in the last twelve months as its strategy to focus on core categories including collectibles and fashion has gained traction. In February, eBay announced a deal to acquire second-hand fashion marketplace Depop from Etsy for $1.2 billion.
Both companies have faced pressure to adapt as consumer habits change. GameStop closed its stores and pivoted to collectible toys and trading cards as digital downloads cut into physical video game sales. In Cohen’s vision, a combined entity would create a scaled consumer market that could compete at a much higher level.
Ryan Cohen: From Chewy Founder to GameStop’s Unlikely Deal Maker
Cohen’s trajectory in corporate America was unorthodox. He founded online pet products retailer Chewy and built it into a massive e-commerce business before buying a large stake in GameStop in late 2020, publicly criticizing the company at the time for moving too slowly toward e-commerce.
He joined GameStop’s board in January 2021, when the business had a market cap of just over $1 billion, rose to chairman later that year, and has since vowed to reinvent the struggling retailer.
He has built a loyal following among retail investors, a community he will mobilize to support any deal with eBay.
eBay Shares Rise 15% on Takeover Report
Markets reacted quickly to this news. Accordingly Bloomberg eBay shares rose more than 15% in after-hours trading Friday. Wall Street Magazine‘s report. GameStop’s shares also rose on broader momentum surrounding Cohen’s publicly announced deal-making goals.
It remains to be seen whether eBay’s board will welcome the approach of a smaller company. The coming weeks will likely be crucial in determining whether Cohen’s most ambitious move moves from preparation to reality.
