3 hours ago - Business

Why GameStop's offer for eBay feels weird

Dan Primack

Illustration of a video game controller with an absurd number of buttons. — Illustration: Aïda Amer/Axios

GameStop has offered to acquire eBay for around $55 billion in cash and stock.

Why it matters: This felt weird, even by GameStop standards, when news first leaked on Friday. Then it got downright surreal Monday morning, as GameStop CEO Ryan Cohen either couldn't or wouldn't explain the basic bid details during a CNBC interview.

By the numbers: GameStop is offering $125 per share, representing a 20% premium to where eBay stock closed on Friday.

But the math doesn't seem to math, which was the main subject of Cohen's televised intransigence.
GameStop holds around a 5% stake in eBay, mostly via derivatives, and says it secured a "highly confident letter" from TD Securities to lend up to $20 billion. Its cash pile is around $9 billion, and its market cap is $11 billion.
One possibility is a giant co-investment. But the most likely investors, Middle Eastern sovereigns, all are belt-tightening due to the Iran war.

Zoom in: While eBay acknowledged receipt of the proposal, Cohen says there's not yet been any engagement.

The bottom line: "Cohen [sees] ways to integrate GameStop's bricks-and-mortar stores with eBay's online operations to help scale both companies." — Lauren Thomas, WSJ

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Why GameStop's offer for eBay feels weird

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