GameStop Launches $56 Bid to Acquire eBay
GameStop has launched a takeover bid worth about $55.5 bn to acquire eBay, aiming to transform the platform into a major rival to Amazon.
The video game retailer said it is offering $125 per share in a mix of stock and cash, representing a 46% premium over eBay’s average share price since it began building a stake earlier this year.
GameStop CEO Ryan Cohen said the company sees significant untapped potential in eBay. «eBay should be worth, and will be worth, a lot more money,» he told The Wall Street Journal, adding he envisions turning the platform into a business valued in the hundreds of billions of dollars.
To finance the deal, GameStop said it has secured a commitment for around $20 bn in debt funding from TD Bank, part of Canada’s TD Bank Group. The company also reported holding $9.4 bn in cash reserves as of late January.
GameStop said it expects to generate $2 bn in annual cost savings within the first year after the acquisition, which it claims would significantly boost eBay’s earnings.
The bid comes despite a large gap in the companies’ market values. As of Friday’s close, GameStop was valued at about $11.9 bn, compared to eBay’s $46.2 bn.
Cohen indicated he may take the offer directly to shareholders if eBay’s management resists the proposal.
