GameStop makes unsolicited bid to acquire online auction giant eBay for $56B

LEILA FADEL, HOST: A video game chain is trying to level up. GameStop has made an unsolicited bid to acquire eBay. It's an audacious bet. GameStop's market value is about $11 billion and it's offering to buy eBay for about $56 billion. GameStop saw a trading frenzy five years ago, when it became a meme stock thanks to Reddit users. Lauren Thomas is The Wall Street Journal reporter who broke the story about this deal, and she joins me now. Good morning, Lauren.

LAUREN THOMAS: Good morning. Thanks for having me.

FADEL: Thank you for being here. So why does GameStop's CEO, Ryan Cohen, want eBay?

THOMAS: Yeah, it's a great question. I know a lot of people were scratching their heads over the weekend and certainly into Monday, you know, when GameStop finally confirmed that it did make this bid. But Ryan Cohen, he's really been laying the groundwork for some time, hinting at this. You know, he's got big ideas. He's looking to pursue big, bold M&A to really scale GameStop into - or at least attempt to scale GameStop, I should say - into something much larger than what it is today.

I actually spoke to Ryan Cohen first back in January. We had a piece in the Journal where he said he had a number of companies that he had set his sights on. He was doing his homework, looking to pursue a big deal. And, of course, fast-forward to just a couple days ago and we found out that that target was indeed eBay.

FADEL: Now, GameStop is making a big offer here compared to its size.

THOMAS: Yes.

FADEL: Where is Cohen going to get the money to make this work?

THOMAS: Yeah, I think that's the big question. Certainly, Wall Street analysts, and investors, too, are asking themselves - asking Ryan, where do you come up with the money? So...

FADEL: Yeah.

THOMAS: ...Ryan, when he made this proposal just a couple days ago, he said that he did have a $20 billion commitment from a bank - from TD Bank - for debt financing. So that's $20 billion. GameStop then has about $9 billion in cash on its balance sheet, so there's another nine. Cohen has said the deal would be 50% cash, 50% stock, so we could assume that it's possible GameStop could issue more shares of its own stock to fund part of this deal. But you're certainly still left with a gap there to ultimately get to 56 billion, like you said, which is a massive number, so I think it remains to be seen.

I think there are still some lingering questions around where could GameStop potentially come up with some of this additional capital. It's possible they could bring in other partners. I wrote in my story over the weekend, you know, Cohen has been seen as someone that has ties to some of these sovereign wealth funds over in the Middle East. It's possible you could see some of these foreign investors possibly come into the deal. But that definitely remains a big question.

FADEL: Now, eBay is worth far less today than it was at its peak about 20 years ago.

THOMAS: Yeah.

FADEL: But as you reported, it's been on an upswing lately. Is eBay interested in selling?

THOMAS: You make a great point. So Ryan Cohen's not going after a company that's, you know, got a depressed valuation, that's certainly not a struggling retailer or e-commerce platform by any means. eBay shares, ahead of this offer and ahead of this news being made public, were up quite significantly over the past year. They've got a relatively new CEO that's been making a lot of steps to kind of turn the business around, and, certainly in the age of AI, find new ways to use AI to really help their whole process with buyers and sellers and just create a more efficient marketplace.

And they recently actually pursued some smaller M&A of their own. eBay bought this secondhand marketplace, Depop, earlier this year, or announced a deal to acquire Depop. And so, you know, they've been looking to tap into younger consumers as well. And - but that's certainly where the overlap with GameStop comes into play - younger consumers.

FADEL: Lauren Thomas covers mergers and acquisitions for The Wall Street Journal and broke this story about GameStop wanting to acquire eBay. Thank you so much for your time and your reporting.

THOMAS: Thanks for having me.

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