Is GameStop really gonna buy eBay?

GameStop just did something insane.

A $12 billion company made an unsolicited bid to buy eBay for $56 billion.

No call.
 No warning.
 Straight to a public offer.

In this episode, we break down:

• What a hostile takeover actually is (and why this qualifies)
• The financing problem nobody can ignore
• Why the market is basically saying “yeah… probably not happening”
• And the real play here — because this might not be about buying eBay at all

This is one of those deals where the numbers don’t make sense…
 …but the strategy might.

Sometimes the smallest fish in the room doesn’t need to win.
 It just needs everyone to notice it tried.

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#GameStop #eBay #StockMarket #Investing #HostileTakeover
 #MergersAndAcquisitions #WallStreet #MarketNews
 #YouCantBeSerious #DavidVsGoliath #MarketDrama

Transcript

SPEAKER_00 0:00

In nature, size matters. But maybe in finance it doesn't, because a$12 billion company just made a bid for a$56 billion one. It's a bold strategy, Cotton. Let's see if it pays off. GameStop wants to buy eBay. Unsolicited, unannounced. Ryan Cohen didn't even call them first. eBay found out the same way you did. So here's the way the deal goes it's$125 a share for eBay. Half of it cash, half of it game stop stock. Try to say that three times fast. I've been trying it so much. They've been quietly accumulating a 5% stake since February, buying through derivatives and comment shares and stuff like that. Now remember, once you cross 5% ownership of a publicly traded company, you have to file a 13G, 13D for if you're going to be active or 13G if you're passive with the SEC, letting everyone know that you're there. So Ryan Cohen, the CEO, filed it yesterday, May 3rd, whatever it is. He has to do that because that's the law. The offer represents a 46% premium to where eBay was trading in February, and a 20% premium to where it closed on Friday. eBay's board said they'll review it. They also made sure to mention publicly that nobody from GameStop called them before this landed on their desk. That's a hostile bid. Because a lot of times when you hear about bids for companies, they've worked it out with the boardrooms. Everyone knows they kind of negotiated. This one is like, hey, by the way, we're taking you over. So Cullen's idea, I guess, is to have the 1600 GameStop stores become eBay drop-off and shipping spots. And they're going to have live sales broadcasts right from the GameStop stores. So in January, he told CNBC he's gonna there's gonna be some big deal that's gonna be transformational, never mentioning that it was eBay, and it's gonna be something that was never done before with the history of capital markets. It's gonna be really, really big. Really, really very, very big. He was not lying about the size. So now let's think about it. GameStop has roughly 9 billion in cash, which is a lot. They got a highly confident letter from TD Bank for 20 billion. That's 29 billion. The deal is 56 billion. Andrew Ross Sorkin did the math on live television, and he goes very patiently, like he was explaining to a toddler, you have 9 billion on your balance sheet. You have this letter from TD, that's another 20 billion. We're now at 40 billion. We're still off by 16 or 20 billion. And the TD letter, it's a highly confident letter, not locked-in finance. Cohen's respond, yeah, we'll see what happens. Storkin tried again. I'm just trying to understand where the rest of the money would come from. Cohen goes, I don't understand your question. He said that twice. Becky quick jumps in and goes, wait, you're on our air. We thought we get he interrupted, I don't understand your question. The full details he explained are on the website. Serious, man. You cannot be serious. He flew to New York, sat down with Squawkbox, and told three of the most recognizable anchors in financial television to go read the website. That's a bold strategy. So here's what he did say about the financer. He will issue more GameStop stock, I can't say that, to close the gap. That's called dilution. When a company issues new shares, existing shareholders own a smaller percentage of the same company, more slices, same pie. That's why GameStop dropped 10% today. The shareholders who already own the stock are looking at a deal that could require massive new share issuance to get it done, and they're not really happy. Meanwhile, eBay popped about 5% to 109. Remember, the offer is 125. There's a$16 gap there. That's the market telling you how likely they think the deal is going to close. They're not sure. The prediction markets have it at about a 15 to 20% odds. And then Culling said, if eBay's board doesn't engage with him, he'll take the offer directly to the shareholders, a proxy fight. That means going around management and appealing directly to the people who own the stock. He's done aggressive before. He's turned GameStop from a dying mall retailer into a company sitting on$9 billion in cash with no debt. But when a porter asks him how a$12 billion company buys a$56 billion one, and the answer is check the website. That's not a financing plan. That's a press release. God, it's crazy. This might not be close. The market clearly thinks it probably won't. But Cohen just put eBay in play. Other buyers could emerge. eBay's board now has to respond. They have to by rule. eBay shareholders now have a number in their head 125. Sometimes the fish doesn't eat the whale. Sometimes you just blast it out there and we'll see what happens.