NEW YORK—GameStop is weighing the withdrawal of its $56 billion takeover offer for eBay and exploring a strategic partnership focused on collectibles instead.
Under the potential agreement, GameStop would propose leveraging its approximately 1,600 U.S. stores to expand both companies' presence in the trading cards and collectibles market. GameStop would also seek board representation at eBay as part of any such arrangement. No final decision has been made.
The consideration follows GameStop's unsolicited, nonbinding offer to acquire eBay for $125 per share, made public on Sunday. The offer valued eBay at roughly $55.5 billion in a cash-and-stock deal split evenly between both components. GameStop currently owns 9.75 percent of eBay.
The $125 per share offer represented a 20 percent premium to eBay's closing price of $104.07 on the Friday before the announcement. GameStop said it began accumulating a stake in eBay on Feb. 4. Following the offer, eBay shares climbed about 5 percent on Monday to trade around $109, remaining well below GameStop's offer price. GameStop's stock sank 10 percent after the bid was announced.
GameStop's market value stood just under $12 billion at the time of the offer, against eBay's market value of $46 billion—highlighting a substantial funding gap for the proposed $56 billion acquisition.
Financing concerns were immediate and widely discussed. GameStop had secured a $20 billion financing letter from TD Bank and holds approximately $9.4 billion in cash. GameStop CEO Ryan Cohen said the company had the ability to issue additional shares to complete the transaction. "We are offering half cash, half stock, and we have the ability to issue stock in order to get the deal done," Cohen said.
eBay confirmed receipt of the initial offer and said its board would review the proposal. eBay later rejected the $56 billion bid, citing "the uncertainty regarding your financing proposal," along with operational risks and the debt load the transaction would carry.
Cohen had previously criticized eBay's management, calling it an "under-earning" business and arguing its earnings power could double under tighter cost controls. He pointed to eBay's annual sales and marketing spending of $2.5 billion. "When a business is not growing users and spending $2.5 billion in sales and marketing, there's a lot of fat to cut," Cohen said.
Cohen also said eBay could take on more leverage because it would generate more money if run more efficiently. He told CNBC that GameStop had not initiated direct conversations with eBay's management. "For obvious reasons, eBay is a public company, there's all kinds of perverse financial incentives from the board to the management team. So there's only one way to approach something like this," Cohen said.
Cohen had prepared to take his $56 billion acquisition proposal directly to eBay's shareholders after the board's rejection. "It makes us one of the largest shareholders. So they have a fiduciary duty to their shareholders to evaluate this proposal," he said.
Cohen also withdrew a proposed bonus plan of up to $35 billion for himself after investor backlash and a shareholder lawsuit. GameStop's board had supported the proposed eBay acquisition as part of a broader strategic vision for the company, which gained prominence as a meme stock during a 2021 retail trading surge.
The shift from an outright acquisition to a potential partnership reflects the hurdles faced by GameStop's initial bid, particularly around financing and eBay's resistance.
