GameStop Persists with eBay Acquisition Plan, Boosts Stake from 5% to 10%

Ebrun Original - July 26: Recent regulatory filings submitted by video game retailer GameStop reveal that the company now holds approximately 43.39 million shares of common stock in e-commerce platform eBay, representing about 9.8% of its total issued shares. This marks a significant increase from the roughly 5% stake it held in early May this year.

This move to increase its holdings indicates that GameStop continues to actively advance its plan to acquire eBay, despite having its unsolicited takeover offer explicitly rejected earlier.

Looking back at the public timeline of this acquisition intent, in May this year, GameStop CEO Ryan Cohen sent a letter to eBay's Chairman proposing to acquire all of eBay's common stock for a total consideration of approximately $56 billion.

According to the transaction structure proposed by Cohen at the time, the offer price was $125 per share, to be paid half in cash and half in stock. GameStop also claimed it had secured a 'highly confident' debt financing letter from TD Securities for up to $20 billion.

However, regarding the source of the remaining massive funds, Cohen failed to provide more detailed financing pathways in public interviews, casting significant uncertainty from the outset over this acquisition widely seen by the market as a case of 'a snake trying to swallow an elephant.'

eBay's response was swift and direct. In May, the company formally rejected the cash-and-stock proposal, stating the offer was 'neither credible nor attractive.'

However, this strongly worded rejection did not deter GameStop. Since then, Cohen has repeatedly stated in public interviews that he remains committed to pushing forward with the acquisition plan.

Details disclosed in the latest regulatory filings show that GameStop's stake increase is being implemented substantially.

Last month, the company spent approximately $381 million to purchase 3.5 million eBay shares; last Friday, it completed the settlement of options contracts corresponding to about 39 million shares, formally converting those related rights into common stock. This series of actions has doubled its shareholding percentage in just over two months.

Simultaneously, preparations for subsequent capital maneuvers are also underway.

Last month, GameStop's shareholders approved an increase in the company's authorized share count, providing greater flexibility for potential transaction arrangements. Cohen himself has also pledged to commit $500 million of his personal funds to support this acquisition.

Regarding financing, Cohen reiterated that GameStop has secured 'a highly confident financing commitment letter' from banks and added that 'there is also a lot of institutional interest in this deal.'

In an interview with Bloomberg, when asked about specific advancement strategies, Cohen stated: 'I'm not going to telegraph my moves, but we're going to get eBay one way or another.' This statement continues his consistent assertive style.

Two months ago, when first proposing the acquisition, Cohen outlined his strategic intent, suggesting that if the deal were completed, the new company under his leadership could become 'a more competitive rival to Amazon.'

Notably, when a Bloomberg reporter directly asked during the interview if he would be willing to increase the offer price for eBay, Cohen responded negatively: 'I'm not going to negotiate against myself.'

As of the time of writing, eBay has not yet responded to GameStop's further increased stake.

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