Gamestop continues to target eBay and has amassed a near 10% stake in the business. (Photo by Justin Sullivan/Getty Images)
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Ryan Cohen has never been afraid of taking on larger rivals. He transformed Chewy into one of America’s biggest online pet retailers, became the architect of GameStop’s unlikely revival after the meme-stock frenzy, and has consistently argued that retailers need to reinvent themselves rather than simply chasing scale.
And now he has embarked on what may prove to be the most audacious takeover attempt in recent retail history.
GameStop has nearly doubled its stake in eBay to 9.8%, escalating pressure on the online marketplace after its unsolicited takeover proposal was rebuffed earlier this year, suggesting Cohen appears prepared for a prolonged battle.
According to a regulatory filing with the U.S. Securities and Exchange Commission, GameStop now owns 43.4 million eBay shares after significantly increasing its position over recent weeks. The retailer purchased 3.5 million shares before converting options covering a further 39 million shares into common stock, using cash generated from its substantial balance sheet.
The latest purchases come just weeks after GameStop disclosed a 5% economic interest in eBay alongside an unsolicited cash-and-stock proposal valuing the marketplace at approximately $57 billion.
In response, eBay’s board wasted little time in dismissing the proposal. Directors described the offer as “neither credible nor attractive”, questioning both the financing package and the strategic rationale behind combining one of the world’s largest online marketplaces with a specialist video game retailer whose own turnaround remains incomplete.
Cohen Looks Set To Push Forward
However, Cohen appears determined to force the issue and the GameStop chief executive has expanded his advisory team and begun discussions with some of eBay’s largest institutional shareholders as he explores taking his case directly to investors in a strategy that bears the hallmarks of activist investing.
By building close to the 10% ownership threshold, GameStop has positioned itself as one of eBay’s largest shareholders, giving Cohen considerably greater influence over future corporate developments even if a full acquisition never materialises.
Under his proposal, shareholders would receive an equal combination of cash and newly issued GameStop shares, while Cohen has pledged roughly $500 million of his own capital and would become chief executive of the merged company.
But funding remains the proposal’s biggest obstacle. GameStop has outlined a non-binding financing commitment worth around $20 billion from TD Securities, but the facility depends upon the combined business achieving investment-grade credit status following completion.
That caveat has provoked investor scepticism because GameStop’s own market capitalization remains only around one-fifth of eBay’s, creating a large mismatch between buyer and target. Even after raising billions through equity offerings during and after the meme-stock phenomenon, questions remain over whether GameStop possesses the financial firepower or operational capability to absorb a business several times its own size.
GameStop CEO Ryan Cohen promised to cut costs and focus on long-term profitability as he continues the company’s turnover. (AP Photo/Charlie Neibergall, File)
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Several Wall Street banks have also questioned whether credit markets would support leverage on this scale, yet Cohen insists his vision centres on creating a broader digital commerce platform capable of competing more effectively against Amazon by combining eBay’s enormous global marketplace with GameStop’s brand recognition among younger consumers.
Strategy Pays Off For eBay
Likewise, eBay has invested heavily in authenticated trading cards, luxury watches, handbags and sneakers under chief executive Jamie Iannone, attempting to move beyond its reputation as simply an online auction site. Those higher-value categories have delivered stronger margins and attracted younger consumers.
GameStop claims it could eliminate approximately $2 billion in annual costs within 12 months of completing a merger, though it has yet to provide detailed breakdowns explaining where those savings would originate.
GameStop still derives much of its revenue through its thousands of physical retail stores across the U.S. and Europe, while eBay generates revenue through marketplace fees with comparatively limited physical infrastructure. In addition, GameStop has embraced aggressive cost-cutting and entrepreneurial decision-making under Cohen, while eBay has focused on disciplined execution since Iannone took over in 2020.
Indeed, since Iannone became chief executive, eBay’s market value has almost tripled as investors rewarded improvements in profitability, shareholder returns and strategic focus.
That evolution arguably strengthens its case against GameStop. If shareholders already believe eBay possesses a successful long-term strategy, there is less incentive to support a highly leveraged takeover proposal from a significantly smaller company whose own transformation remains unfinished.