Video game retailer GameStop has proposed to buy e-commerce giant eBay for $55.5 billion. The proposed deal values eBay at $125.00 per share, representing a 20% premium over eBay's closing price on Friday. GameStop also quietly began accumulating a stake in eBay since last week.
The company revealed in a statement that it has already built around a 5% stake in eBay since 4 February. GameStop says the deal would be funded with a mix of cash and GameStop stock. The company also claims to have secured a commitment from TD Bank to provide around $20 billion in debt financing for the deal.
Notably, the proposed deal marks a rare scenario where the company has attempted to buy an entity almost four times its size. Currently, GameStop holds a market value of roughly $11.9 billion, compared to eBay's massive $46 billion market capitalisation.
GameStop CEO Ryan Cohen, in a letter to eBay, promised to deliver $2 billion in annualised cost reductions within twelve months of closing the deal. Cohen also noted that he would serve as the chief executive of the combined entity.
"I will receive no salary, no cash bonuses, and no golden parachute – I will be compensated solely based on the performance of the combined company," Cohen wrote.
In the letter to eBay, Cohen targeted the e-commerce giant's Sales & Marketing budget, noting that the massive spend only resulted in a net increase of fewer than one million active buyers in fiscal 2025.
"More spend is not producing more users on a marketplace with near-universal brand recognition," GameStop wrote in its statement while proposing around $1.2 billion reduction in that department alone.
GameStop also states that it would cut $500 million in costs by consolidating General & Administrative functions and another $300 million by trimming Product Development.
The retailer projects that these reductions alone would drive eBay's diluted earnings per share from $4.26 to $7.79 in year one.
Cohen on why GameStop wants to buy eBay:
“eBay should be worth—and will be worth—a lot more money,” Cohen told The Wall Street Journal. “I’m thinking about turning eBay into something worth hundreds of billions of dollars.”
Cohen also told the publication that if eBay isn't receptive to the proposal, he was prepared to run a ‘proxy fight’ and take the offer directly to its shareholders.
He also noted that putting the two companies under one roof would create opportunities for cutting costs and boosting earnings. Cohen told the publication that the two companies already had some overlap, including a focus on selling collectibles like trading cards.
“There is nobody who is more qualified, based on my experience, to run the eBay business,” Cohen told the Journal.
Cohen also said he sees ways of integrating GameStop's physical stores with eBay's online operations in order to scale both companies. He also said that eBay could be working more towards live commerce, a way where companies sell directly to customers via real-time video streams.
“It could be a legit competitor to Amazon,” Cohen noted.
