Game Stop offers $56 billion for e Bay, struggles to explain how it'll pay for it - Ars Technica

Overview

Game Stop offers $56 billion for e Bay, struggles to explain how it’ll pay for itvar abtest_2152865 = new ABTest(2152865, 'click');

Amid falling revenue and store closures, Game Stop wants to buy the much larger e Bay.

Details

Game Stop yesterday made an unsolicited offer to buy e Bay for $55.5 billion. Game Stop claims that e Bay has underperformed and spends too much on sales and marketing and argues that it would become a stronger company if it cuts costs and is combined with Game Stop’s physical retail locations.

“Game Stop’s ~1,600 US locations give e Bay a national network for authentication, intake, fulfillment, and live commerce,” Game Stop Chairman and CEO Ryan Cohen wrote in a letter to e Bay Chairman Paul Pressler.

e Bay’s market capitalization is over four times larger than Game Stop’s. Game Stop faces skepticism about the viability of its offer but says it will obtain debt financing and pay with a mix of cash and stock.

Game Stop’s proposal envisions a system in which Game Stop staff inspect and verify items to be listed on e Bay. “Game Stop staff already inspect and grade hardware and trading cards every day. Sellers walk in, items are verified on the spot, and listings carry a trust badge,” the proposal said.

The stores will “serve as drop-off and shipping nodes,” providing “a national fulfillment network without incremental e Bay capital expenditure,” Game Stop said. The stores, according to Game Stop’s plan, will “double as broadcasting studios. e Bay supplies the inventory and the buyer base; Game Stop supplies the physical footprint to compete in the live-commerce category.” This would apparently help e Bay sellers use livestreaming to promote their products.

Cohen intends to become CEO of the post-merger company if e Bay accepts the deal and it is completed. A Game Stop press release said that Cohen “owns ~9% of Game Stop and receives no salary, no cash bonuses, and no golden parachute. He will be compensated solely based on the performance of the combined company.”

Game Stop is still chugging along five years after its meme-stock mania, though it reportedly closed about 470 stores in the US at the beginning of 2026. It also closed 590 US-based stores in 2024. As of this writing, Game Stop’s stock price had fallen about 2 percent today, while e Bay’s had risen nearly 6 percent.

Unsurprisingly, Game Stop faces skepticism about its ability to finance a deal to buy a much larger company. Game Stop has a market capitalization of about

Cohen said Game Stop had about

Cohen took questions about the financing on CNBC’s Squawk Box today, but co-anchor Andrew Ross Sorkin said the deal math doesn’t make sense. Sorkin noted that Game Stop’s market capitalization, cash, investments, and potential financing from TD add up to

Sorkin followed up by asking where the rest of the money comes from. Cohen answered, “it’s half cash, half stock.”

Sorkin tried again, saying, “that math doesn’t get you to the price that you’re offering.” Cohen, responded, “I don’t understand your question. We’re offering half cash, half stock, and we have the ability to issue stock in order to get the deal done.”

CNBC hosts also asked Cohen for evidence that he can grow a consumer business that can rival Amazon, given that Game Stop revenue has declined sharply the past few years. Game Stop’s net sales were

“Didn’t you guys call for Game Stop’s demise multiple times? Like, it should have been bankrupt by now?” Cohen said. “Look at our financial performance. Is it better than you guys anticipated? Because you guys said it was going to be doing really, really poorly, and it’s actually doing okay.”

Describing his ambitions, Cohen said that “e Bay has the second largest commerce franchise and there’s a big opportunity to do something much larger and pull costs out of the system as well as accelerate revenue growth and leveraging our physical infrastructure, our focus on collectibles. It could be a much larger business, but bringing in an entrepreneurial mindset is what I plan on doing.”

At another point, Cohen said that Game Stop is in a “very difficult business” and “should have been bankrupt multiple times over, and it’s doing okay, it’s making a few bucks. e Bay is in a very, very strong position but it could be in a much stronger position.”

Game Stop’s press release said its $125-per-share offer amounts to a 46 percent premium over e Bay’s closing price on February 4, the day Game Stop started accumulating a stake in the company. Game Stop’s current stake in e Bay is 5 percent.

e Bay confirmed that it received the offer in a press release today and said that “e Bay had no discussions with or outreach from Game Stop prior to receiving the proposal.” e Bay said its board “will review this proposal with a focus on the value to be delivered to e Bay shareholders, including the value of the Game Stop stock consideration and the ability of Game Stop to deliver a binding, actionable proposal.”

Morgan Stanley analysts issued a research note saying that e Bay and Game Stop have “fundamentally different” business models. “e Bay is a 3P [third-party] e Commerce marketplace that doesn’t take inventory risk while Game Stop is primarily an in-store wholesaler,” stated the research note, which was provided to Ars. “Given those dynamics, we struggle to outline meaningful potential cross-sell synergies as most of Game Stop’s inventory is already available on e Bay while the long-tail inventory base of e Bay isn’t well suited for in-store retail.”

Morgan Stanley similarly doubted the potential cost savings. “On the expense side, we also think the potential opportunities would likely be minimal as physical and digital business require different cost bases, as do 3P marketplaces vs. 1P wholesalers. To add another challenge, Game Stop has already undergone a series of large cost cuts,” the research note said.

Morgan Stanley analysts expressed skepticism about “how a deal would be financed given the material valuation gap.” If completed, they said it could end up as the largest leveraged buyout ever, “surpassing the recently announced $55 billion Electronic Arts transaction,”

Game Stop said that e Bay spent

Game Stop proposed cutting another

Game Stop touted its own financial performance under Cohen, saying that it “moved from a

e Bay last week reported Q1 2026 revenue of

Game Stop, which is on a different fiscal schedule, reported net sales of

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Key Takeaways

• Game Stop offers $56 billion for e Bay, struggles to explain how it’ll pay for itvar abtest_2152865 = new ABTest(2152865, 'click');

• Amid falling revenue and store closures, Game Stop wants to buy the much larger e Bay

• Game Stop yesterday made an unsolicited offer to buy e Bay for $55

• “Game Stop’s ~1,600 US locations give e Bay a national network for authentication, intake, fulfillment, and live commerce,” Game Stop Chairman and CEO Ryan Cohen wrote in a letter to e Bay Chairman Paul Pressler

• e Bay’s market capitalization is over four times larger than Game Stop’s