eBay stock jumps after GameStop’s $56B takeover bid by Cohen

Shares of eBay moved sharply higher in premarket trading on Monday after Ryan Cohen, chief executive of GameStop, made an unsolicited offer to acquire the company for about $56 billion.

The stock rose roughly 7.4% before the opening bell, extending gains after reports that GameStop had been quietly building a stake in the online marketplace operator.

Cohen said GameStop accumulated around a 5% position and proposed a deal valuing eBay at $125 per share in cash and stock, representing a premium of about 20% to Friday’s closing price.

Prior to the bid, eBay carried a market valuation of around $46 billion.

Investor optimism meets execution questions

While the initial price action reflected optimism around a potential acquisition, questions remain about the feasibility of the deal.

GameStop, with a market value of roughly $12 billion, is significantly smaller than eBay, raising doubts about its ability to execute a transaction of this size.

Cohen said GameStop has secured a commitment letter from TD Bank for up to $20 billion in debt financing.

However, the remaining funding structure remains unclear, with the possibility of involving outside investors such as sovereign wealth funds.

Despite these uncertainties, the premium embedded in the offer has supported eBay’s stock in early trading.

The proposal also arrives at a time when eBay has been reporting improving fundamentals, including an 18% year-over-year increase in gross merchandise volume in its most recent quarter.

Still, some analysts have expressed skepticism about the strategic rationale.

According to Bernstein analysts, “Why disrupt things? The turnaround is working,” reflecting a view that eBay’s current trajectory may already be delivering value without the need for a major corporate overhaul.

eBay board signals cautious review

In response to the proposal, eBay said its board and financial advisers would review the unsolicited bid, emphasizing a disciplined approach.

The company noted that there had been no prior discussions with GameStop before receiving the offer.

“The Board will review this proposal with a focus on the value to be delivered to eBay shareholders, including the value of the GameStop stock consideration and the ability of GameStop to deliver a binding, actionable proposal,” eBay said.

“Until the Board has further carefully and thoroughly considered the proposal, the company does not intend to comment further at this time.”

Cohen has indicated he is prepared to escalate the situation if necessary, including taking the offer directly to shareholders through a proxy fight.

In outlining his vision, Cohen pointed to potential synergies between GameStop and eBay, particularly in collectibles such as trading cards.

He also suggested integrating GameStop’s physical retail footprint into eBay’s operations.

“EBay should be worth — and will be worth — a lot more money,” Cohen said. “I'm thinking about turning eBay into something worth hundreds of billions of dollars.”

“It could be a legit competitor to Amazon,” he added.