Reports Indicate GameStop Preparing a Tender Offer to Acquire Auction Platform eBay
According to reports, game retailer GameStop is preparing a tender offer to acquire online auction platform eBay. This would be an unprecedented deal for the used video game retailer, as eBay's market capitalization is more than three times that of GameStop.
The Wall Street Journal first reported that GameStop is preparing to make a takeover offer for eBay, stating that the company has been steadily increasing its stake in the auction platform ahead of issuing a potential offer. Currently, GameStop has a market capitalization of approximately $11 billion, while eBay's current market capitalization reaches $45 billion. Therefore, whatever acquisition plan GameStop's board of directors is devising will inevitably involve a certain amount of leverage. This is not the first time the gaming industry has seen an acquisition completed through debt financing; just last year, EA completed a privatization through a $55 billion leveraged buyout.
GameStop currently holds approximately $9 billion in cash and marketable securities, meaning the company would need to issue a massive amount of debt to fund the acquisition of eBay, a deal exceeding $45 billion. GameStop CEO Ryan Cohen undoubtedly has ample motivation to push this deal forward, as it would significantly accelerate his progress towards achieving the performance targets in his equity incentive plan.
The Wall Street Journal also reported that if eBay is resistant to the acquisition proposal, GameStop may launch a tender offer directly to eBay's shareholders.
Affected by the news, the stock prices of both companies rose in after-hours trading, with eBay's stock reaching a historic high.