GameStop (GME.N) CEO Ryan Cohen remains steadfast in his pursuit of e-commerce giant eBay (EBAY.O), vowing to do “whatever we need to do” despite eBay’s board rejecting his $56 billion unsolicited takeover bid as “neither credible nor attractive.” Cohen’s early May offer proposed $125 a share, split evenly between cash and stock, with the cash portion drawn from GameStop’s $9.4 billion reserves and potentially backed by a $20 billion debt financing commitment. GameStop, primarily known as a video game retailer, has diversified its business under Cohen’s leadership, shifting focus towards trading cards and collectibles.
With the direct bid rebuffed, Cohen, also co-founder of online pet goods retailer Chewy, is reportedly exploring alternative strategies. One potential path involves a tender offer, bypassing eBay’s board to directly solicit shareholders with a premium buyout. However, this tactic faces an uphill battle, as major institutional investors like Vanguard, BlackRock, and State Street collectively own over 22% of eBay and are deemed unlikely to back a hostile takeover. Analysts like Don Bilson of Gordon Haskett firmly believe “there is zero chance that a tender offer works,” doubting shareholder willingness to participate.
GameStop’s current “economic exposure” to eBay, largely through derivatives, offers limited voting rights, with only 25,000 shares owned outright, falling short of what is typically required for a proxy fight. This contrasts sharply with eBay’s strong performance, having seen its shares jump 32% this year and reporting a 31% operating profit margin, significantly higher than GameStop’s 10%. Despite these challenges, Cohen has publicly ramped up pressure, criticising eBay as “obese.” GameStop recently sought shareholder authorisation for more stock issuance, intensifying speculation about Cohen’s next move in what is expected to be a prolonged process.
