GameStop guns for eBay

GameStop proposed on Sunday to buy eBay Inc for about US$56-billion in a cash-and-stock deal, with CEO Ryan Cohen saying he was prepared to take the bid directly to shareholders should eBay’s board be unreceptive.

GameStop — once a stock market minnow that shot to fame during a meme-stock frenzy five years ago — is offering to pay $125/share in a 50-50 mix of cash and stock, Cohen said in a letter to eBay’s board. Based on eBay’s Friday close, the bid represents a premium of about 20%.

eBay has a market capitalisation nearly four times larger than GameStop, making the buyout bid an ambitious attempt.

The US videogame retailer has already built up a 5% stake in eBay through shares and derivatives, Cohen said in the letter.

Cohen, who is pushing to boost the struggling videogame retailer’s market value more than tenfold, told the Wall Street Journal that putting eBay and GameStop under one roof would create huge opportunities to improve earnings and cut costs. “It could be a legit competitor to Amazon,” Cohen said about eBay.

Cohen said in the letter that GameStop would cut $2-billion of eBay’s annualised costs within 12 months of close, resulting in an increase in the company’s earnings per share.

National network

GameStop’s 1 600 US locations would give eBay a national network for authentication, intake, fulfilment and live commerce, he added. He told the Wall Street Journal he was prepared to pursue a proxy fight if eBay’s board was not receptive to the proposal.

“eBay should be worth — and will be worth — a lot more money,” Cohen said in the interview. “I’m thinking about turning eBay into something worth hundreds of billions of dollars.”

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Cohen, dubbed the “meme king” by retail traders for his role in the 2021 meme-stock frenzy and his outsized influence among individual investors on social media, has built a reputation for bold, unconventional bets that can move markets.

A potential deal between GameStop and eBay would upend the usual M&A playbook, as it is rare for a company to target one nearly four times its size. Such deals typically rely on substantial debt, stock issuance, or both — banking on future earnings of the combined company to justify the cost.

Cohen said he has already lined up financial commitments, including a commitment letter for about $20-billion in debt from TD Bank, and may seek backing from external investors including Middle Eastern sovereign wealth funds for the deal, according to the WSJ report.

Cohen said that following the close, he would serve as the CEO of the combined company.

Cohen joined GameStop’s board in January 2021 as the company struggled with a shift to online shopping and digital downloads, and later became CEO, pushing aggressive cost cuts that helped return the company to profitability.

Once a staple for in-store gamers, the brick-and-mortar retailer was hit hard during the pandemic when players moved online. GameStop soared to global prominence in 2021 when an army of retail investors bought the stock after it was squeezed by hedge fund short sellers. Its shares soared more than 1 700% at the time.

Despite Cohen’s turnaround pledges, the Grapevine, Texas-based company continues to grapple with structural shifts in the gaming industry. GameStop reported a 14% drop in fourth-quarter revenue last month.

Shares gain

By contrast, eBay, which has grown from its humble beginnings in 1995 as a hobby for entrepreneur Pierre Omidyar, last week forecast second-quarter revenue above Wall Street estimates, banking on demand for collectibles and motor accessories as well as live-streamed auctions.

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GameStop had a market value of nearly $12-billion at the close of business on Friday, while eBay had a market value of about $46-billion. Their shares have gained 32.1% and 19.5%, respectively, this year.  — Mihika Sharma and Chandni Shah, (c) 2026 Reuters