.jpg)
1 hour ago
3
Article content
GameStop Corp. is proposing to buy eBay Inc. for about US$56 billion in cash and stock, a bold attempt by Ryan Cohen to take over a storied e-commerce name several times larger.
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
- Daily puzzles, including the New York Times Crossword.
SUBSCRIBE TO UNLOCK MORE ARTICLES
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
- Daily puzzles, including the New York Times Crossword.
REGISTER / SIGN IN TO UNLOCK MORE ARTICLES
Create an account or sign in to continue with your reading experience.
- Access articles from across Canada with one account.
- Share your thoughts and join the conversation in the comments.
- Enjoy additional articles per month.
- Get email updates from your favourite authors.
THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.
Create an account or sign in to continue with your reading experience.
- Access articles from across Canada with one account
- Share your thoughts and join the conversation in the comments
- Enjoy additional articles per month
- Get email updates from your favourite authors
Sign In or Create an Account
or
Article content
The gaming retail chain offered US$125 per share in cash and stock for the online marketplace, or about a 20 per cent premium to its Friday close. GameStop, which built a roughly five per cent stake in eBay, said it’s secured an initial, non-binding “highly confident letter” from TD Bank to provide about US$20 billion of debt financing. In a memo to investors Sunday, Cohen’s company pledged to find some $2 billion of annual savings within 12 months of closing.
Article content
Article content
Article content
EBay stock surged about 10 per cent in pre-market trading in New York Monday, though to about US$114 — substantially below the value of the offer — in a sign investors see hurdles to completing a deal. GameStop stood largely unchanged.
Article content
By signing up you consent to receive the above newsletter from Postmedia Network Inc.
Article content
The takeover bid follows the surprising ascent of GameStop, a chain of video game outlets that shrank its brick-and-mortar footprint after gamers increasingly bought software in digital stores. In 2021, it became the centre of a retail-investor frenzy. Michael Burry, the Scion Asset Management head who rose to prominence after a winning wager against mortgages ahead of the 2008 financial crisis, helped fuel GameStop’s rally by taking a bullish stance on the firm around 2019.
Article content
Cohen is now proposing to take over a company roughly four times larger than the retail chain he operates. GameStop had a market value of US$12 billion as of Friday. EBay was much bigger at around US$46 billion, though the game retailer has about US$9 billion in cash. The takeover offer is split evenly between cash and GameStop common stock.
Article content
Both companies have struggled to adapt to changing consumer preferences. GameStop has shut stores and emphasized collectible toys and trading cards as more video games get purchased online. EBay too has been pushing collectibles and used goods on its own marketplace, creating a business overlap.
Article content
Article content
About 136 million shoppers globally made purchases on EBay in the 12-month period ending March 31. Shoppers spend about US$80 billion annually on the marketplace.
Article content
Article content
“EBAY itself is in the midst of a turnaround — one that is going well,” Bernstein analysts wrote. “But to the extent there are any challenges or volatility from categories like Collectibles, this could put further strain on the math. We see real challenges to structuring this deal.”
Article content
EBay representatives declined to comment. Chief executive Jamie Iannone was scheduled to meet on Monday with Bloomberg News. But a company representative made contact Sunday to cancel the meeting, saying Iannone’s travel plans changed over the weekend.
Article content
GameStop’s Cohen earlier told the Wall Street Journal he’s prepared for a proxy fight and will take the offer to shareholders if necessary.
Article content
“EBay should be worth — and will be worth — a lot more money,” he told the newspaper. “I’m thinking about turning eBay into something worth hundreds of billions of dollars.”
Article content
Cohen has set ambitious goals for himself. In January, the company unveiled a compensation package that would reward him with options on over 171 million shares if he lifted GameStop’s market value to US$100 billion. In Sunday’s statement, Cohen said he would take over a combined entity but get paid solely based on the performance of that firm.
Article content
“Though the companies overlap in collectibles and resale, we see low probability of a deal,” Bloomberg Intelligence analysts Poonam Goyal and Sydney Goodman said in a note on Friday. “Any credible offer would require substantial dilution and introduce meaningful execution risk.”
Article content
With assistance from Kevin Whitelaw and Se Young Lee
Article content
Article content
English (US)