GameStop makes $56 billion bid to buy eBay
FILE-A GameStop store is shown in a shopping area. (Photo by: Jeffrey Greenberg/Universal Images Group via Getty Images)
GameStop is proposing to purchase eBay for a staggering $56 billion in a cash-and-stock deal.
The video game, consumer electronics, and gaming merchandise retailer is offering to pay $125 a share in a 50-50 mix of cash and stock, GameStop CEO Ryan Cohen stated in a letter to eBay’s board, according to Reuters.
Cohen could explore support from external investors for the potential eBay deal, telling the Wall Street Journal that if the deal did happen it may be a "legit competitor" to Amazon.
GameStop bid to purchase eBay
Dig deeper: Reuters reported that GameStop has established a 5% stake in eBay through shares and derivatives, CEO Ryan Cohen said in a letter.
GameStop’s bid to buy eBay was first reported by the Wall Street Journal, who referenced an interview with Cohen.
Reuters noted that Cohen told the Wall Street Journal that putting eBay and GameStop in one entity might produce major opportunities to improve earnings and slash costs.
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Citing the letter, Reuters added that Cohen explained that GameStop would cut $2 billion of eBay's annual costs within 12 months of closing, resulting in a boost in the organization’s earnings per share.
According to Reuters, as of Jan. 31, GameStop had roughly $9.4 billion in cash and liquid investments, Cohen shared in his letter, adding that the cash component of the deal would be funded from that and third-party equity and debt financing. Cohen could look into support from external investors for the deal.
Cohen also stated in his letter that GameStop's 1,600 locations nationwide would give eBay a national network for authentication, intake, fulfillment, and live commerce, Reuters reported.
In January, FOX Business reported that GameStop has endured financial hardships since the 2010s as digital game downloads surged in popularity and competition increased from online retailers like Amazon. Most GameStop stores were in malls, which saw declining consumer foot traffic.
The Source: Information for this story was provided by Reuters and FOX Business. This story was reported from Washington, D.C.