GameStop CEO Aims to Turn eBay into a "True Competitor to Amazon"
GameStop CEO Ryan Cohen has made an unsolicited offer to acquire eBay for approximately $56 billion, asserting a clear path to transform it into a strong competitor to Amazon. He revealed that GameStop quietly holds around 5% of eBay's shares, offering $125 per share in a cash and stock combination, a roughly 20% premium over eBay's Friday closing price.
GameStop CEO Ryan Cohen
Cohen stated in an interview, “eBay is currently severely undervalued and should be worth a much higher market capitalization in the future. My goal is to build eBay into a multi-hundred billion dollar company.”
He indicated that GameStop has received a commitment letter from Toronto-Dominion Bank, which can provide up to $20 billion in debt financing for the deal.
GameStop formally submitted a letter of intent to eBay on Sunday and released the full letter after details of the acquisition were disclosed in the Wall Street Journal. In a letter to eBay Chairman Paul Price, Cohen stated that GameStop began building its stake in eBay on February 4th; the acquisition price is 50% cash and 50% GameStop stock.
Cohen said that if eBay’s board rejects the acquisition proposal, he is prepared to launch a proxy fight, directly marketing the acquisition plan to all shareholders. According to eBay’s proxy filings, the nomination window for directors before this year’s June annual shareholder meeting has now closed.
Cohen told the newspaper that integrating GameStop and eBay under the same umbrella would lead to cost reductions and increased profitability. The two businesses already have overlapping areas, such as the sale of collectibles like trading cards.
Discussing his professional background, Cohen said, “Given my experience, no one is better suited to lead eBay.” He founded the pet e-commerce platform Chewy and then played a key role in the transformation of GameStop.
The Wall Street Journal first reported on Friday evening that GameStop had secretly increased its stake in eBay and was preparing a takeover offer.
eBay released a strong first-quarter earnings report at the end of last month, with the company’s market capitalization around $46 billion before the news was announced; after the acquisition news broke, eBay’s pre-market stock price rose sharply by about 10%.
In terms of size, GameStop is much smaller than eBay, with a market capitalization of only about $12 billion, making it extremely difficult to complete this massive acquisition.
GameStop has approximately $9 billion in cash available for the transaction, but there is still a huge funding gap from the $56 billion acquisition price. People familiar with the matter revealed that Cohen may introduce external investors, such as Middle Eastern sovereign wealth funds, to back the deal.
Some Wall Street analysts have questioned the likelihood of the acquisition being completed. Investors generally recognize eBay’s focus on collectibles and niche categories. Bernstein Research stated in a report, “Why disrupt the existing pattern? eBay’s recovery path is already clear.”
In 2020, Cohen built a large stake in GameStop and criticized its slow pace of e-commerce transformation. He subsequently gained immense popularity among retail investors and launched aggressive investments in companies such as Bed Bath & Beyond.
During the meme stock frenzy of 2021, GameStop gained notoriety as retail investors rallied around it. In 2023, Cohen, who had already served as chairman, officially became CEO of GameStop.
Under Cohen’s leadership, GameStop closed hundreds of brick-and-mortar stores, exited most overseas businesses, and transformed to focus on high-margin nostalgic products such as trading cards and retro game consoles.
Cohen said that integrating GameStop’s offline stores with eBay’s online business could achieve two-way scale expansion.
For example, offline stores could serve as receiving, authentication, and inspection points for eBay sellers. He also believes that eBay should increase its investment in live e-commerce, connecting brands directly with consumers through real-time livestreaming.
Regarding integration goals, Cohen said, “eBay has the full potential to become a true competitor to Amazon.”
eBay is also pushing forward with cost-cutting reforms and introducing artificial intelligence tools to optimize buying and selling processes. In February, the company announced a global workforce reduction of approximately 6.5%, affecting about 800 employees.
eBay’s first-quarter results at the end of last month were strong, with the platform’s gross merchandise volume (GMV) increasing by 18% year-on-year.
Historically, there have been precedents for smaller companies completing ultra-large mergers and acquisitions. Earlier this year, Paramount merged with SkyDance, successfully winning the bid for Warner Bros. Discovery; in 2015, Charter Communications also used debt leverage to acquire Time Warner Cable, which was much larger than itself.
If the acquisition is ultimately completed, Cohen will also receive substantial benefits. The Wall Street Journal previously reported that GameStop adjusted Cohen’s compensation incentive plan earlier this year, tying it to market capitalization and performance targets; if the company’s market capitalization exceeds $100 billion and achieves profitability targets, his holdings could gain up to $35 billion.
In the letter, Cohen pledged to serve as CEO of the merged company after the transaction is completed and will not receive a fixed salary, with compensation fully linked to the operating performance of the merged group.
He told the newspaper, “In the coming years, I will devote myself to the operation and development of eBay as I did when I led the revitalization and transformation of GameStop.”
For this acquisition, GameStop has hired Kirkland & Ellis to provide legal support, and Toronto-Dominion Securities as its financial advisor.