You have to hand it to GameStop chief Ryan Cohen for sheer chutzpah. The billionaire former petcare mogul has in recent days launched an audacious bid for the $11 billion (€9.4 billion) video game retailer he runs to take over the $46 billion online marketplace eBay.
The cash and stock deal would see GameStop pay $125 per share, an almost 20 per cent premium to eBay’s closing price on Tuesday.
Cohen’s plan is to turn the combined entity into a genuine competitor to Amazon, repurposing his company’s roughly 1,600 US stores into a physical fulfilment network for eBay, in which GameStop has already built a 5 per cent stake.
He wants to adopt the cost-cutting initiatives he has implemented at GameStop since coming on deck as chief executive in 2023 to the wider group. Cohen has attempted to stanch the bleeding from the retailer’s declining brick-and-mortar business by closing stores and refocusing on collectables.
All of that sounds laudable, but how the deal might be financed is causing at least some GameStop shareholders to wince.
One such high-profile booster of Cohen and the former pandemic meme stock company he runs is Michael ‘Big Short’ Burry, who said on Tuesday that he has now sold his entire stake in the business. In a nutshell, he said the financing structure of the proposed deal – about $9.4 billion in cash, another $9 billion in stock and at least $20 billion in debt – implies a ratio of leverage-to-earnings that borders on distressed.
The unveiling of Cohen’s proposal has generated a flood of headlines and GameStop’s share price has jumped in recent days. Some believe creating a buzz around a company that has largely struggled in its post-meme stock era could be the entire point of the exercise.
Others believe that, although unlikely, the deal is not completely implausible and that Cohen is just brazen enough to pull it off.
