By Aditya Soni
Bengaluru — Shares of US online marketplace eBay jumped 10% but were well below GameStop’s offer price in premarket trading on Monday, in a sign of doubts among investors that the $56bn bid from the much smaller videogame retailer will succeed.
GameStop offered $125 per eBay share, split evenly between cash and stock, representing a roughly 20% premium to eBay’s Friday close. GameStop shares were down about 3%.
CEO Ryan Cohen said he is prepared to take the bid directly to eBay’s shareholders and pursue a proxy fight if the online retailer’s board resists.
Bernstein analysts flagged financing challenges, given GameStop’s smaller balance sheet and the scale of debt and equity that would be required to buy eBay. The brokerage said they would be “even more surprised if anything became of it”.
GameStop has already built a 5% stake in eBay through shares and derivatives, but eBay’s market capitalisation is nearly four times larger than GameStop.
The videogame retailer, which had total debt of $4.16bn on January 31, said it has lined up about $20bn in debt. Cohen said the cash portion of the offer would be funded through existing liquidity and third-party financing.
Cohen, a central figure in the 2021 meme-stock frenzy, said combining the two companies could unlock $2bn in annualised cost cuts and turn eBay into a stronger rival to Amazon by leveraging GameStop’s 1,600 US stores.
Michael Burry, best known for predicting the 2008 financial crisis, said in a Substack post on Saturday a full acquisition would be a stretch for GameStop, citing the stark disparity in valuation as speculation around a deal intensified.
GameStop and eBay shares have gained 32.1% and 19.5%, respectively, so far this year.
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