GameStop Offers to Buy eBay for $125 a Share in Cash and Stock Deal

GameStop proposed buying eBay for $125 a share in a cash and stock deal, $20 more than the shares closed at in New York trading on Friday, the company said in a Sunday statement.

GameStop Chief Executive Ryan Cohen said he would take the bid straight to shareholders if eBay's board turns it down.

In a letter to eBay, Cohen said he planned $2 billion in cost savings within a year of the deal's completion. The BBC has contacted eBay for comment.

Under the proposal, Cohen would become chief executive of the combined company and receive no salary, no cash bonuses and no golden parachute. He would be compensated only based on the performance of the new firm.

GameStop, with a current stock market valuation of about $11.9 billion, said it has a commitment from TD Securities for around $20 billion in debt to finance the deal.

Most of the proposed cuts would target eBay's sales and marketing operations, where Cohen aims to reduce spending by $1.2 billion.

Higher spending there had failed to bring in more users for the marketplace with near-universal brand recognition, GameStop said.

The proposal does not look like a terribly good offer because it would load eBay with GameStop's debt, said retail analyst Sucharita Kodali of Forrester.

It makes sense for GameStop since linking with a larger company like eBay could raise its valuation, she told the BBC.

The truth is, we are not necessarily putting two strong companies together, Kodali added.

eBay shares rose more than 13% in after-hours trading on Friday when news of the potential offer broke. GameStop shares gained around 4%.

GameStop has closed many stores in recent years but still runs about 1,600 outlets in the US.

Those shops would provide eBay with a national network for live commerce and other operations, Cohen said.

Cohen, GameStop's boss since 2023, has criticized its slow move into e-commerce.

During the Covid-19 pandemic, GameStop sat at the center of one of the wildest stock market stories in recent years. Investment influencer Keith Gill, known as Roaring Kitty, helped drive up its value.