Over the weekend, GameStop Corp. submitted a proposal to acquire eBay for $125 per share, for an aggregate undiluted equity value of about $55.5 billion. This is an expansion of GameStop’s existing 5% stake in eBay through stock ownership.
GameStop’s proposal includes a plan to reduce $2 billion in costs for eBay. These include $1.2 billion reduced spend on sales and marketing, as GameStop says, “More spend is not producing more users on a marketplace with near-universal brand recognition.” It also proposes $300 million reduced spend on product development and $500 million from general and administrative (including real estate, legal, IT and professional services).
The Wall Street Journal reported on the potential proposal last Friday, noting that GameStop’s estimated market value at the time sat at $11 billion. In GameStop’s proposal, CEO Ryan Cohen said that GameStop has $9.4 billion in cash and liquid investments, with the “cash consideration will be funded from cash and liquid investments on GameStop’s balance sheet and third-party equity and debt financing.”
Cohen notes that he would be CEO of the combined company, and would “receive no salary, no cash bonuses, and no golden parachute – I will be compensated solely based on the performance of the combined company.” WSJ noted that Cohen would make $35 billion in stock if the company’s market value rose to $100 billion.
eBay confirmed the receipt of GameStop’s proposal, noting that it was unsolicited and that it had had no discussions with GameStop prior to this. It stated it “does not intend to comment further at this time.”