Meme stock GameStop makes $56 billion bid for eBay in bid to rival Amazon

US video game retailer GameStop It announced Sunday that it had made an unsolicited, non-binding offer to buy. eBay The e-commerce platform was valued at approximately $55.5 billion in exchange for $125 per share in a cash-and-stock deal..

The bid, split equally between cash and GameStop common shares, represents a 20% premium to eBay’s Friday close of $104.07 and a 46% premium to its February closing price. GameStop said in a statement that the 4 — gaming retail giant has begun building a stake in the company.

Shares of eBay rose as much as 13.4 percent to $118 in after-hours trading. GameStop, which became the so-called “meme stock” during the 2021 retail frenzy that sent its shares sharply higher, rose nearly 4% to $27.6 per share.

The announcement came as GameStop Chief Executive Officer Ryan Cohen said: Wall Street Magazine He said he sees a path to making the e-commerce company a much larger competitor amazon.com.

“EBay should and will be worth a lot more money,” Cohen said. “I intend to turn eBay into something worth hundreds of billions of dollars.”

GameStop held a nearly 5 percent stake in eBay and received a debt financing commitment letter from TD Bank for up to $20 billion to make the deal possible. expression. The remainder of the deal will be financed from a cash pile of approximately $9.4 billion.

The offering is subject to approval by eBay’s board of directors, regulators and shareholders of both companies. EBay did not immediately respond to CNBC’s request for comment.

Both companies have struggled to adapt to changing consumer preferences, and it remains unclear whether eBay’s board will view GameStop, which had its own market cap of about $11 billion before the news broke, as a credible acquirer for a company four times its size.

As of Friday, GameStop’s market cap was $12 billion, according to LSEG data, while eBay’s was much larger at $46 billion, raising questions about the feasibility of the bid.

Cohen told the Journal he was prepared to take the offer directly to shareholders in a proxy fight if necessary. According to GameStop’s statement, if the deal is finalized, Cohen is expected to serve as the Chief Executive Officer of the combined company.

In its proposal, GameStop said eBay would cut annual costs by $2 billion within a year, targeting an inflated sales and marketing budget totaling $2.4 billion in fiscal 2025, while net active buyer growth would remain steady below 0.75%.

“More spending does not necessarily mean generating more users in a market with near-universal brand recognition,” he said in the statement.

The company estimated that the cost reductions alone would increase eBay’s earnings per share, measured under standard U.S. accounting rules, to $7.79 from $4.26 in the first year.

GameStop also offered approximately 1,600 U.S. retail stores as physical infrastructure for the eBay marketplace, offering a network for authentication, pickup, fulfillment and live trading capabilities.

Cohen first hinted at plans to acquire a publicly traded consumer company larger than GameStop in January, telling CNBC at the time that the deal would be “transformative” and “has never been done before in the history of capital markets.”