GameStop Increases eBay Stake After $56 Billion Bid Rejected

GameStop has increased its stake in eBay to approximately 6.55%, up from 5%, despite the online marketplace’s formal rejection of a $56 billion takeover bid [2]. eBay chairman Paul Pressler dismissed the proposal as "neither credible nor attractive," citing significant concerns over the retailer's acquisition financing and the operational risks of merging the two companies [1].

The takeover attempt, unveiled by GameStop CEO Ryan Cohen on May 4, proposed a cash-and-stock deal at $125 per share [1]. To fund the cash portion, Cohen secured a $20 billion commitment letter from TD Securities, contingent on the combined entity maintaining an investment-grade credit rating [1]. Moody’s quickly flagged the deal as "credit negative" due to the high leverage involved, casting doubt on whether the financing would ever materialize [1].

The bid faced immediate skepticism due to the structural mismatch between the two firms; GameStop reported roughly $4 billion in annual revenue compared to eBay’s $10.3 billion [1]. The situation grew more unconventional when Cohen announced plans to sell office items, including old carpet and store signs, on eBay to help fund the purchase [1]. eBay briefly banned Cohen’s seller account before reinstating it, calling the move an automated error [1].

Market analysts remain unconvinced that a deal will proceed. Wedbush analyst Michael Piccolo noted that eBay has the resources to implement a shareholder-rights plan to block a hostile takeover, and the market has consistently traded eBay shares above the $125 offer price, signaling low confidence in the acquisition's success [1, 2]. Investor Michael Burry, who closed his position in GameStop following the announcement, criticized the strategy, stating, "Never confuse debt for creativity" [1].

Cohen has suggested he may take the proposal directly to eBay shareholders, though he faces the same financing hurdles that led the board to reject his initial offer [1]. The bid appears tied to Cohen’s broader goal of pushing GameStop’s market valuation to at least $100 billion, a milestone that could trigger up to $35 billion in stock compensation for the CEO [2].

With the board firmly opposed and the financing structure under heavy scrutiny, the central question remains whether Cohen will continue to pursue a hostile proxy fight or if the increased stake is merely a precursor to a quiet exit.