Video game retailer GameStop announced Sunday its intention to acquire online marketplace eBay in a massive $56 billion transaction, with Chief Executive Ryan Cohen stating he’s willing to bypass the company’s board of directors if they reject the proposal.
The Texas-based gaming company, which gained worldwide attention during the 2021 meme stock surge, has presented an offer of $125 per share using equal parts cash and stock, according to Cohen’s correspondence with eBay’s leadership team. This proposal represents approximately a 20% increase over eBay’s closing price on Friday.
The acquisition attempt is particularly noteworthy given eBay’s market value is roughly four times greater than GameStop’s, making this an unusually aggressive corporate maneuver.
Cohen revealed in his letter, obtained by Reuters, that GameStop has already secured a 5% ownership position in eBay through direct shares and financial derivatives.
The unsolicited takeover bid was initially disclosed by the Wall Street Journal through an exclusive interview with Cohen, who also serves as GameStop’s primary shareholder.
According to Cohen’s statements to the Journal, merging the two companies would generate significant opportunities for enhanced profitability and operational savings. He believes the combination could position the merged entity as a serious rival to Amazon.
“It could be a legit competitor to Amazon,” Cohen told the Journal regarding eBay’s potential.
In his formal letter, Cohen outlined plans to eliminate $2 billion in eBay’s annual operating expenses within one year of completing the deal, which would boost the combined company’s per-share earnings.
Cohen emphasized that GameStop’s network of 1,600 physical stores across the United States would provide eBay with nationwide infrastructure for product verification, inventory management, order fulfillment, and interactive commerce experiences.
When speaking with the Wall Street Journal, Cohen indicated his readiness to initiate a shareholder proxy battle should eBay’s board refuse to consider the acquisition proposal.
eBay has not yet provided any response to media inquiries about GameStop’s takeover offer.
“EBay should be worth – and will be worth – a lot more money,” Cohen stated during the interview. “I’m thinking about turning eBay into something worth hundreds of billions of dollars.”
Cohen, often called the “meme king” by individual investors for his central role in the 2021 retail trading phenomenon and his significant social media influence, has established himself as someone willing to make unconventional market moves that can shift investor sentiment.
A successful merger between GameStop and eBay would represent a dramatic departure from typical corporate acquisition strategies, as companies rarely attempt to purchase competitors nearly four times their size. Such transactions usually require significant borrowing, new stock issuance, or both approaches, relying on projected future earnings to validate the investment.
According to the Wall Street Journal report, Cohen has already secured financial backing commitments, including approximately $20 billion in debt financing from TD Bank, and may pursue additional funding from international investors, including Middle Eastern sovereign wealth funds.
Cohen announced that he would assume the chief executive role of the combined organization following the transaction’s completion.
Cohen became a GameStop board member in January 2021 as the company faced challenges from the industry’s transition toward online shopping and digital game downloads. He subsequently took over as CEO, implementing significant cost-reduction measures that helped restore the company’s profitability.
The physical retail chain, once a popular destination for in-person gaming enthusiasts, suffered major setbacks during the pandemic as consumers shifted to online platforms. GameStop achieved international recognition in 2021 when numerous retail investors purchased the stock amid pressure from hedge fund short positions, causing share prices to surge over 1,700%.
Despite Cohen’s transformation efforts, the Grapevine, Texas-headquartered company continues facing challenges from fundamental changes in the gaming marketplace. GameStop announced a 14% decline in fourth-quarter sales last month.
Meanwhile, eBay, which evolved from entrepreneur Pierre Omidyar’s 1995 side project, recently projected second-quarter revenues exceeding Wall Street expectations, driven by strong demand for collectible items and automotive parts, plus live-streamed auction events.
As of Friday’s market close, GameStop held a market capitalization of nearly $12 billion, while eBay was valued at approximately $46 billion. Both companies’ stock prices have risen 32.1% and 19.5% respectively during this year.
