GameStop offers $125 per share to acquire eBay

GameStop made an unsolicited, non-binding offer to acquire eBay for $125 per share, valuing the company at roughly $55.5 billion, the company said in a statement.

The offer is split evenly between cash and GameStop common stock and represents about a 20% premium to eBay’s recent close of $104.07. Shares of eBay rose as much as 13.4% in after-hours trading to around $118, while GameStop shares climbed about 4% to $27.60.

GameStop has built roughly a 5% stake in eBay and said it secured a commitment letter from TD Bank for up to $20 billion in debt financing, with the remainder financed from about $9.4 billion in cash on its balance sheet. GameStop had a market value of $12 billion while eBay was much larger at roughly $46 billion, according to LSEG data cited in the announcement.

Chief Executive Ryan Cohen said he sees a path to substantially grow eBay. "EBay should be worth, and will be worth, a lot more money," Cohen said to the Wall Street Journal. GameStop said Cohen would be expected to serve as CEO of the combined company if the transaction closes.

GameStop proposed $2 billion in annual cost cuts within a year and pointed to operating changes it says would boost eBay’s earnings per share to $7.79 from $4.26 in the first year. The proposal is subject to approval from eBay’s board, regulators, and shareholders from both companies; Cohen said he is prepared to take the offer directly to shareholders if necessary.