GameStop submits $56 billion unsolicited offer for eBay, proposing a merger of the video game retailer and the ecommerce platform. The half-cash, half-stock bid at $125 per share represents a premium of 20% to 46% over eBay's recent closing prices.
Deal Structure and Financing
GameStop announced the bid on May 3, 2025, offering $125 per share in a combination of cash and GameStop stock. The premium is 46% over eBay's closing price on February 4, 2025, and approximately 20% over its closing price the Friday before the announcement.
GameStop has disclosed it began accumulating eBay shares in February 2025 and now holds a 5% stake. According to CEO Ryan Cohen, there have been no prior discussions with eBay regarding the transaction, signaling a potential hostile bid.
The financing structure faces significant scrutiny. GameStop reports $9 billion to $9.4 billion in cash on hand and has received a "highly-confident" letter from TD Securities for up to $20 billion in debt financing. However, the total acquisition value of $56 billion exceeds these combined resources, leaving analysts estimating a financing gap of approximately $16 billion.
When questioned by CNBC about this gap, Cohen stated: "It's half cash, half stock, but the details are on our website." Pressed further, he added, "I don't understand your question. We're offering half cash, half stock, and we have the ability to issue stock in order to get the deal done."
Strategic Rationale
Cohen outlined plans in a letter to eBay's chair, proposing that the combined company could cut costs and improve profitability by leveraging GameStop's approximately 1,600 U.S. stores for authentication, fulfillment, and live commerce broadcasts. The proposal includes using GameStop locations as drop-off and shipping points for eBay transactions.
The plan targets $2 billion in annualized cost cuts within one year of closing, including halving eBay's $2.4 billion annual sales and marketing budget, plus reductions in product development and administration. GameStop criticized eBay's spending, noting the company added only 1 million net active buyers while spending $2.4 billion in fiscal 2025.
Market Reaction and Company Background
eBay shares rose approximately 7% to 14% in after-hours and premarket trading following the announcement. GameStop shares declined approximately 10% on the announcement day, with analysts attributing the drop to investor concerns over dilution from the proposed stock issuance.
GameStop shares are up over 23% year-to-date as of the announcement, but down approximately 9% over the past 12 months and more than 38% over five years.
"I never wanted to be CEO of GameStop... my goal is to become CEO of eBay." — Ryan Cohen to Business Insider
GameStop gained prominence during the 2021 meme-stock rally. Under Cohen's leadership as CEO (since September 2023), the company swung from a $381 million net loss in 2021 to $418 million net income in its latest fiscal year. GameStop reported a 14% drop in revenue to $1.10 billion for the holiday quarter.
eBay, launched in 1995, remains a major U.S. ecommerce site but has lost market share to Amazon, Walmart, Shein, and Facebook Marketplace. The company reported a 19% increase in first-quarter revenue and 18% growth in gross merchandise volume to $22.2 billion.
eBay's Response and Investor Concerns
eBay confirmed receipt of the bid and stated it had no prior discussions with GameStop. The company's board, with financial and legal advisors, said it would review the proposal, focusing on value to eBay shareholders, including the value of GameStop stock consideration and GameStop's ability to deliver a binding proposal.
Investor Michael Burry, who revealed a position in GameStop in January 2025, stated he sold his stake following the announcement. In a Substack post, he called the acquisition price too high and the strategy "pedestrian," suggesting GameStop would be better served acquiring companies such as Wayfair, ADT, or Assured Guaranty. Burry expressed concern that the deal would require significant leverage, potentially burdening GameStop with debt that could hinder competitiveness and innovation.
Related Events
In a separate incident, Ryan Cohen's personal eBay account was suspended for selling personal items, then reinstated less than 12 hours later. The suspension notice stated that Cohen's activity was believed to put the eBay community at risk. Cohen had been listing memorabilia, vintage items, and rare games—including GameStop storefront signs and his original Apple iPhone—to help fund the buyout proposal. eBay declined to comment on the suspension.
Cohen stated in a phone interview that he criticized eBay's leadership, alleging excessive operating expenses and that executives sold stock without buying shares. He stated he would not take a salary if he became eBay CEO.