GameStop’s $56 billion proposal to acquire eBay is becoming the focus of social media, with investors both excited and full of doubts about this potential “Shen Tunxiang” merger.
GameStop CEO Ryan Cohen proposed to acquire e-commerce giant eBay for US$125 per share in cash and stock, a premium of approximately 20% to its latest closing price. This bold move aims to combine GameStop's physical retail network with eBay's online platform to jointly challenge Amazon's dominance.
However, the market is generally skeptical about this "snake swallowing elephant" style acquisition. Investors have expressed strong concerns about GameStop's ability to raise funds. GameStop's current market value is less than US$12 billion, only about a quarter of eBay. Although Cohen claims to have obtained a $20 billion debt financing commitment from TD Securities, this is far from covering the total acquisition price of $56 billion. The remaining huge funding gap is expected to be filled through the issuance of a large number of new shares, which will cause existing shareholders' equity to be severely diluted.
The bearish voices also include well-known investor Michael Burry. He sold all GameStop shares and called the trading strategy "couldn't be more mediocre."
Currently, eBay’s stock price is well below the acquisition price of US$125, and its market value is not as high as that of the parent company of Snapchat, reflecting the market’s deep doubts about whether the transaction can be completed.
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GameStop plans to acquire eBay for $56 billion