Shares of GameStop dropped more than 10% to $23.84 on Monday after doubts surfaced over how the company plans to fund its unexpected $55.5 billion bid for eBay. In an interview with CNBC, CEO Ryan Cohen avoided direct answers on the financing of the proposed deal, saying he did not understand the line of questioning.
According to a letter posted on GameStop’s website, the offer is structured as a half-cash, half-stock deal at $125 per share. The company plans to use around $9.4 billion in cash on hand and has indicated potential debt financing of $20 billion from TD Securities. Including GameStop’s market capitalisation of roughly $11 billion, the total comes to about $40 billion, leaving a gap of $16 billion compared with the bid value.
“Where is the rest of the money coming from?” asked CNBC anchor Becky Quick, following similar questions from co-anchor Andrew Ross Sorkin on the network’s show Squawk Box. “I don’t understand your question,” Cohen said. “We’re offering half cash, half stock, and we have the ability to issue stock to get the deal done. But the full details of the offer are on our website.” GameStop did not respond to further requests for comment.
GameStop’s market valuation stood at about $12 billion as of Friday, significantly lower than eBay’s $46 billion. The retailer gained widespread attention during the 2021 meme stock rally, which elevated Ryan Cohen as a central figure and earned him the label “meme king” among online investors.
Cohen also said he has not held any discussions with eBay regarding the proposal. eBay confirmed this in a statement on Monday and said it would not comment further until its board has reviewed the offer.
GameStop has built an estimated 5% stake in eBay, largely through derivatives along with some holdings in common stock, according to CEO Ryan Cohen. The remaining portion of the proposed deal is expected to be funded through its cash reserves of about $9.4 billion, along with the option to issue additional shares.
Cohen said this makes GameStop one of eBay’s largest shareholders, adding that the company’s board has a fiduciary responsibility to assess the proposal. He described eBay as a business that is underperforming relative to its potential and said GameStop’s own transformation offers a model for improvement.The Wall Street Journal was the first to report the unsolicited bid. Cohen told the publication he is willing to take the offer directly to shareholders through a proxy fight if required. If the transaction goes through, he is expected to take on the role of Chief Executive Officer of the combined entity, according to GameStop’s statement.
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