"GameStop ( NYSE:GME | GME Price Prediction) carries a market cap of roughly $10.25 billion and is offering $125 per eBay share in a 50% cash, 50% stock structure that would require something like $28 billion in cash against $9 billion on the balance sheet. Cohen secured a highly confident letter from TD Bank for $20 billion in financing, which is non-binding and doesn't really mean very much. GameStop's offer was recently rejected by eBay ( NASDAQ:EBAY), but it doesn't matter."
"Funding the stock half would force GameStop to issue, by the panel's estimate, four times the amount of stock currently outstanding, which Slate Money called the most dilutive acquisition we've seen in years. Cohen has signaled equity issuance, and the market understood the implication. GME fell by double digits after the announcement. Meanwhile, Polymarket traders price the probability of an actual acquisition at just 21.5% on $355,784 of volume."
"GameStop already owns just under 5% of eBay stock plus options, so every dollar the bid adds to eBay's price is a dollar of mark-to-market profit for the bidder. The offer itself, priced at a 46% premium to February's unaffected price, is its own catalyst. Despite eBay declining, Cohen has goosed the value of an existing position."
"Collectibles climbed to 33.1% of GameStop's Q4 net sales, and Pokemon-card flippers live on eBay. Pair that with eBay's 135 million active buyers and a Depop acquisition aimed at recommerce, and a story emerges. eBay already produced $11.1 billion of full-year revenue against GameStop's $3.63 billion, and CEO Jamie Iannone has been selling steadily, including 10,605 shares at $109.17 on May 4."
GameStop’s proposed acquisition of eBay is framed as a largely performative move rather than a realistic deal. The offer structure would require far more cash than GameStop holds, and the financing letter from TD Bank is described as non-binding. Funding the stock portion would require issuing several times the current shares outstanding, creating heavy dilution and driving a market selloff after the announcement. eBay rejected the bid, but the impact on GameStop’s valuation is still significant. GameStop already holds a meaningful eBay stake, so any increase in eBay’s price benefits GameStop through mark-to-market gains. eBay’s large buyer base and GameStop’s collectibles and recommerce themes support a narrative that can still lift GameStop’s value even without a completed acquisition.
Read at 24/7 Wall St.
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