GameStop has officially put in a bid to buy the e-commerce platform eBay.
Announced in a proposal on Sunday, the total offer amounts to $55.5 billion, with GameStop offering up to $125 per share in cash and stock for eBay. Approximately 50% would be in cash and 50% would be in stocks. GameStop currently has a 5% share in eBay. TD Securities is confirmed to contribute $20 billion to fund the deal.
In a statement released yesterday, eBay confirmed that it will “review and consider the unsolicited proposal” to move forward with a decision that will be the best “course of action” for the company and eBay shareholders.
The Wall Street Journal reports that GameStop CEO Ryan Cohen may prepare a hostile bid if eBay rejects GameStop’s current proposal. If the deal moves forward, the new company would be led by Cohen himself. Approximately $2 billion in cuts would be made within the first year of the merger. Reductions could potentially be made from sales & marketing, product development and general & administrative services.
In an interview, Cohen confirmed that conversations have not yet officially begun between GameStop and eBay management.
“We are just starting,” said Cohen via CNBC’s “Squawk Box.” “For obvious reasons, eBay is a public company, there’s all kinds of perverse financial incentives from the board to the management team. So there’s only one way to approach something like this.”
GameStop itself is valued at approximately $11.98 billion. The plan to acquire eBay and turn it into a “competitor” for Amazon comes amidst reported struggles within the company as video gaming continues to transition online.
According to the latest information released by the International Trade Administration in 2023, the video game industry’s global value amounted to over $184 billion, as more than 3.2 billion games were registered worldwide. Of all purchases, however, 95% of video games were bought online, while only 5% were bought in stores such as GameStop. Mobile games were also identified as the leading gaming format.
While mobile games accounted for nearly 50% of the global market, console and PC games had a smaller impact, at 28% and 23%, respectively.
Founded in 1984, GameStop has been considered as the leading company for physical gaming purchases for decades. The company currently operates approximately 1,600 stores nationwide. Earlier this year, however, GameStop announced that more than 470 stores nationwide will be permanently closed.
The company’s year-to-date stock currently stands at just over $23, marking a nearly 16% increase.
