Core Data & Deal Metrics:
- The Rejected Bid: eBay’s board rejected an unsolicited $56 billion hostile takeover bid ($125/share) from GameStop ($GME.N) CEO Ryan Cohen, calling it “neither credible nor attractive.”
- The Financing: The half-cash, half-stock offer relies on GameStop’s $9.4 billion cash reserve and a non-binding $20 billion debt commitment from TD Securities.
- The Scale Disconnect: eBay is five times larger than GameStop. eBay holds a $51 billion market cap and a 31% operating margin, vs. GameStop’s $11 billion market cap and 10% margin.
GameStop’s Actual Leverage vs. Exposure:
- The Voting Illusion: GameStop claims a 6.6% economic exposure to eBay, but this is held in derivatives. GameStop owns just 25,000 physical shares outright (0.006%), far below the 20% threshold needed to force a special meeting.
- Stock Dilution: GameStop is asking investors to expand its authorized share cap from 1.5 billion to 2.5 billion shares, signaling a potential massive dilution to fund more eBay equity purchases.
The Roadblocks:
- Hostile Tender Offer: To bypass the board, Cohen must win over Vanguard, BlackRock, and State Street, who automatically control 22% of eBay via index funds. Analysts give this “zero chance” of working.
- Performance Contrast: Under CEO Jamie Iannone, eBay’s stock is up 32% YTD and 200% since 2020. Conversely, GameStop’s stock has plunged 70% since Cohen took over as chairman in June 2021.