GameStop makes staggering $55.5 billion play to acquire online auction giant eBay

Video game retailer GameStop has offered to buy e-commerce giant eBay for $55.5 billion. The proposed deal values eBay at $125.00 per share, representing a 20% premium to eBay’s closing price on Friday. GameStop has also been quietly accumulating shares on eBay since last week.

The company announced in its statement that it has held approximately 5% shares in eBay since February 4. GameStop said the deal will be financed with a mix of cash and GameStop shares. The company also claims that it has committed to provide approximately $20 billion in debt financing for the deal from TD Bank.

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It is noteworthy that the proposed deal points to a rare scenario in which the company seeks to acquire an organization almost four times its size. Currently, GameStop has a market cap of around $11.9 billion, compared to eBay’s massive $46 billion market cap.

In a letter to eBay, GameStop CEO Ryan Cohen promised a $2 billion annual cost reduction within twelve months of the deal closing. Cohen also said he will serve as chief executive of the combined entity.

“I will not receive a salary, cash bonus, or golden parachute; I will only receive compensation based on the combined company’s performance,” Cohen wrote.

In his letter to eBay, Cohen took aim at the e-commerce giant’s Sales and Marketing budget, noting that the big spend resulted in a net increase of just under one million active buyers in fiscal 2025.

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“More spending does not necessarily mean generating more users in a market with near-universal brand recognition,” GameStop wrote in a statement, while recommending a reduction of about $1.2 billion in that department alone.

GameStop also says it will reduce costs by $500 million by combining General and Administrative functions, and another $300 million by shortening Product Development.

The retailer projects that these discounts alone will increase eBay’s diluted earnings per share from $4.26 to $7.79 in year one.

Cohen explains why GameStop wants to buy eBay:

“eBay should be and will be worth a lot more money,” Cohen told The Wall Street Journal. “I intend to turn eBay into something worth hundreds of billions of dollars.”

Cohen also told the publication that if eBay did not accept the offer, he was prepared to wage a ‘proxy war’ and take the offer directly to its shareholders.

He also stated that bringing the two companies under one roof would create opportunities to reduce costs and increase profits. Cohen told the publication that the two companies already have some overlap, including a focus on selling collectibles like trading cards.

“Based on my experience, there is no one more qualified to run the eBay business,” Cohen told the Journal.

Cohen also said he sees ways to integrate GameStop’s physical stores with eBay’s online operations to scale both companies. He also said eBay could push more into live commerce, a way in which companies sell directly to customers via real-time video streams.

“Amazon may have a legitimate competitor,” Cohen said.