The latest chapter in video game retailer GameStop’s tumultuous story is unfolding, as the company has announced plans to buy eBay for $56 billion.
CEO Ryan Cohen told The Wall Street Journal that he plans to offer $125 per share to buy eBay, and that’s about a 20% premium over where eBay’s shares closed on Friday. “There is nobody who is more qualified, based on my experience, to run the eBay business,” he said.
“eBay should be worth–and will be worth–a lot more money. I’m thinking about turning eBay into something worth hundreds of billions of dollars,” he said.
GameStop, as a company, has a market cap of around $12 billion, compared to eBay’s $46 billion. Cohen said he has $20 billion in debt financing from TD Bank to help get the deal done for eBay. There is no word on how eBay is feeling about selling itself, and it’s possible no deal materializes.
This shocking news first came to light on Friday, when WSJ reported that Cohen was eyeing a deal for eBay–this report helped drive up the prices of eBay and GameStop shares after the market had closed for the week. The share prices for both companies rose further after this newest report emerged today, May 3.
Cohen going after a big company for a buyout is not a surprise, as the executive himself said this past January that he would do just that. At the time, he admitted that his plan might not work.
“It’s ultimately either going to be genius or totally, totally foolish,” he said of his plans to buy a company to help accelerate GameStop’s transformation and make it a $100 billion company.
Cohen would personally stand to benefit in a major way of he can succeed in transforming GameStop’s business into a $100 billion behemoth. Earlier this year, GameStop announced a new compensation package for Cohen that would pay him as much as $35 billion if he can reach certain extremely lofty market value and profitability targets, including reaching a valuation of $100 billion.
Cohen’s role as GameStop CEO has been controversial, as the billionaire Chewy founder has overseen a dramatic downsizing of the company’s business with layoffs, store closures, and selling off the iconic gaming magazine Game Informer.