GameStop (GME.N), opens new tab proposed on Sunday to buy eBay Inc (EBAY.O), opens new tab for about $56 billion in a cash-and-stock deal, with CEO Ryan Cohen saying he was prepared to take the bid directly to shareholders should eBay's board be unreceptive.
GameStop - once a stock market minnow that shot to fame during a meme-stock frenzy five years ago - is offering to pay $125 a share in a 50-50 mix of cash and stock, Cohen said in a letter to eBay's board. Based on eBay's Friday close, the bid represents a premium of about 20%, News.Az reports, citing Reuters.
Ebay has a market capitalization nearly four times larger than GameStop, making the buyout bid an ambitious attempt.
The U.S. videogame retailer has already built up a 5% stake in eBay through shares and derivatives, Cohen said in the letter, which was seen by Reuters.
Its unsolicited offer to buy the U.S. online marketplace was first reported by the Wall Street Journal, citing an interview with CEO Cohen, also GameStop's largest investor.
Cohen, who is pushing to boost the struggling videogame retailer's market value more than tenfold, told the Journal that putting eBay and GameStop under one roof would create huge opportunities to improve earnings and cut costs.
"It could be a legit competitor to Amazon," Cohen said about eBay to the Journal. (AMZN.O), opens new tab
Cohen said in the letter that GameStop would cut $2 billion of eBay's annualized costs within 12 months of close, resulting in an increase in the company's earnings per share.
GameStop's 1,600 U.S. locations would give eBay a national network for authentication, intake, fulfillment, and live commerce, he added.
He told the Wall Street Journal he was prepared to pursue a proxy fight if eBay's board was not receptive to the proposal.
Ebay did not immediately respond to Reuters requests for comment on GameStop's offer.
"Ebay should be worth - and will be worth - a lot more money," Cohen said in the interview. "I'm thinking about turning eBay into something worth hundreds of billions of dollars."
Cohen, dubbed the "meme king" by retail traders for his role in the 2021 meme-stock frenzy and his outsized influence among individual investors on social media, has built a reputation for bold, unconventional bets that can move markets.
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