CEO gets paid "only if GameStop achieves a market capitalization of $20 billion." Buying a $55bn company would certainly achieve that quickly. I'm not sure how they'd manage that (buy with what? Memes?), other than the should-be-illegal process of putting debt on the acquired company's balance sheet.
hdgvhicv 1 hours ago [-]
Wouldn’t that debt knock down the market cap as much as the value
Otherwise take out a $20b loan and put it in the bank. Assets increase $20b, job done.
lesuorac 1 hours ago [-]
Well, his argument is that he can remove inefficiencies in the combined company.
GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt.
wongarsu 55 minutes ago [-]
He can argue that. But to me it seems more likely that culture and market demands are so different between the two companies that sharing any substantial resources would be to the detriment of at least one of the two halves. And more likely detrimental to both
The most beneficial thing is how even proposing this shifts peoples' perception of Gamestop from a beloved but struggling brick and mortar chain to a successful business
cyanydeez 38 minutes ago [-]
the only benefit I can see is some kind of eBay pick up and verification scheme where sellers use the gamestop locations to send their products and buyers go theere to pick it up. That would basically create a "this is garbage feedback" that could cleanup some of ebay's long standing problems in trust.
mapt 35 minutes ago [-]
While this seems like the perfect synergy with a company that has too many branches and not enough business, those branches are also tiny. I'd bet employees are not enthusiastic about becoming UPS.
Becoming Radio Shack / Microcenter, as far as 3D Printing and DIY electronics, seems like it intersects with their target audience more, but they're also probably pretty short on space for that.
cyanydeez 30 minutes ago [-]
yeah, their shops arnt sized to do much more than UPS style package movement.
I dont see it as a good value, but it's the only thing I see as a synergy. Otherwise it's just more garbage capitalism.
alchemist1e9 8 minutes ago [-]
> garbage capitalism.
How is this defined?
OtherShrezzing 37 minutes ago [-]
>GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt.
GameStop had revenues of $3bn last year and eBay was $10-12bn, so combined it's $13-15bn. A net income increase of 1.2bn on that gross is a tall order for M&A efficiencies. Especially difficult when the two companies have essentially zero operational crossover, besides business admin. It doesn't seem likely to me that merging eBay's accounting/legal departments into GME's (and similar efficiency gains) is going to save anything close to a billion across the two entities.
59percentmore 3 minutes ago [-]
I don't think this is a serious assessment. For years, the core business of both companies has been facilitating the flow of used goods. Gamestop has moved strongly into collectibles recently, with a partnership with collectible grading firm PSA and the introduction of (essentially) lucrative trading card lootboxes, whereas eBay has capitalized on the same expansion of the collectibles market with new live/flash auction features.
IIRC, Gamestop recently had a "trade-in anything" day, where they accepted a variety of products for store credit. Seems an awful lot like this was some sort of test for accepting products in-store for eBay listings, or something along those lines. They already accept trading cards to send off to PSA for grading and to place into their lootbox system.
As far as efficiencies go, you can see things like shifting shipping by individual sellers to mass shipping to/from a warehouse, a much heavier footprint in collectibles, and perhaps quality control that reduces buyer disputes (this one's a bit iffy).
repelsteeltje 57 minutes ago [-]
> Well, his argument is that he can remove inefficiencies in the combined company.
Sigh. The synergy argument, once again.
While historically most mergers don't work out particularly well, I'm absolutely sure this time will be different.
falcor84 27 minutes ago [-]
"How do you make money? Spinoffs, split-ups, liquidations, mergers and acquisitions." - Mario Gabelli
Just sample from these with replacement sufficiently many times and you're all set. At the very least, you'll owe people so much money that they'll have a massive interest in helping you.
fontain 6 minutes ago [-]
Cohen is already rich rich, his GameStop compensation doesn’t really matter much. The eBay acquisition could be a strategy to juice his compensation but I think it is much more likely he does believe that he can achieve his stated aims, which will financially benefit him much more in the long term.
orlp 1 hours ago [-]
GameStop doesn't have (even close to) $55.5B. Their offer from the letter is literally impossible:
> Our offer is $125.00 per share, comprising 50% cash and 50% GameStop common stock
Even if you magically included all existing GameStop stock in the offer, it still would not comprise 50% of $55.5B.
EDIT: looks like it's not impossible and I misunderstood. It's a proposed change of leadership with a $25B injection of cash to sweeten the deal. GameStop would issue shares which would capture the original eBay value (since GameStop would own eBay after the trade), making that part a wash. At least assuming people owning eBay stock currently would value the combined company at at least the sum of their parts, which is a big if.
gizajob 38 minutes ago [-]
I don’t understand why eBay shareholders will suddenly want GME memestock and find any interest in voting for this.
bilekas 29 minutes ago [-]
I don’t understand either but wouldn’t they still be owning eBay? Just with GME?
yk 54 seconds ago [-]
They own eBay + GME + some financial alchemy. If you aren't a financial wizard you should assume that the value of the financial alchemy is negative. (Because 99% of the time it is.) Now, what are the synergies of eBay + GME that outweighs the chaos caused by the merger and the finance stuff?
gizajob 20 minutes ago [-]
I’m not totally sure how it would be structured but if GME is the purchaser then the merged company would be listed under GME and eBay would become a brand in the GME group and no longer a stock listed under the eBay ticker.
The whole thing seems incredibly dubious and fishy. The eBay board should vote this down which is why the CEO of GME has already realised that and said he’ll appeal to the shareholders directly. If eBay wanted to load themselves with twenty billion dollars of unnecessary debt and extra complications which would kill the company then they could do it themselves. They’re not in that kind of business.
JumpCrisscross 25 minutes ago [-]
> GameStop doesn't have (even close to) $55.5B
When the merger concludes, GameStop-eBay will issue the former shareholders of eBay $27.5bn of GameStop-eBay stock, and $27.5bn of cash. (“Cohen said GameStop has a commitment letter from TD Bank to provide up to $20 billion in debt financing” and “GameStop has around $9 billion in cash on its balance sheet to put toward a deal” [1].)
That's just for the cash part. The stock part makes no sense. For this 50/50 deal to work in principle, they'd need to issue around a billion new shares, which would massively dilute the existing ~450M shares. So Ebay shareholders would suddenly own 70% of Gamestop after the deal. It's also highly questionable if investors actually believe the combined stock is worth that much, so the stock price would probably fall and turn those 70% into >90%. At this point it basically becomes a reverse acquisition plus a large loan for the final company from the cash part of the deal.
croemer 38 minutes ago [-]
The stock part is more like a merger than a buyout.
AureliusMA 1 hours ago [-]
Yup.
airstrike 1 hours ago [-]
It's newly issued stock, a common form of making acquisitions cheaper
wongarsu 51 minutes ago [-]
How is a 20bn company going to issue 27bn worth of stock? Or are they just going to pretend the newly issued shares are valued the same per share as existing stock is right now?
28 minutes ago [-]
gizajob 41 minutes ago [-]
via a cunning pump on Wall Street Bets
cyanydeez 37 minutes ago [-]
man, those GME bagholders are gonna love diluted shares.`
CWwdcdk7h 18 minutes ago [-]
They already increased total number of stock by +39% in last 12 months, GME will squeeze the last penny from those people.
cornholio 11 minutes ago [-]
Back in 2021 GME rose two orders of magnitude in the span of a few months. You could argue they only really had 1 penny for each dollar invested, losing that very last penny is the least of their problems.
Imagine yourself (if your morality allows) a typical Wall Street CEO at the center of this hurricane force money windfall driven by internet memes. What else would you do, other than ride it all the way to the bank using the most dubious financial shenanigans known to man?
Lionga 1 hours ago [-]
Have your ever heard of debt? They have a 20B line secured from TD.
orlp 1 hours ago [-]
Yes, that goes into the '50% cash' part of the offer. With a 20B credit line and 7.5B cash from their own coffers (which they claim to have, so let's believe them on their word there), you cover the cash portion.
The issue is the non-cash portion of the offer. They claim that the remaining 27.5B is covered by GameStop stock. But that's more than double the market cap of GameStop.
Vespasian 1 hours ago [-]
Are they under any obligation to ground the value of their own stock or can a salesman simply claim that the "true" value of that stock is much much more than it currently seems to be?
Anonbrit 38 minutes ago [-]
Stock is worth exactly what people will pay for it. Ebay share holders get to vote to accept or reject this deal
croemer 37 minutes ago [-]
Presumably stock market valuation is grounding?
Also, eBay shareholders can vote down the acquisition if they don't think the deal is good for them.
Lionga 1 hours ago [-]
You understand that the gamestop stock would then be owning ebay, thus be worth Ebay + Gamestops Valuation?
orlp 52 minutes ago [-]
Alright, my company MEME offers to buy Apple then for $1 plus 100% of MEME's stock, which is worth more than Apple then since it will own Apple.
If you word it like this it's just a hostile proposed change of leadership. Weird way to apply to become CEO of eBay, but sure.
ceejayoz 48 minutes ago [-]
You can do that.
The shareholders have to vote for it, though.
Lionga 15 minutes ago [-]
You would not be CEO of Apple. You have 0% stock of MEME left after giving away 100% and any apple shareholder has the same % of MEME as they had of Apple before. If this would happen NOTHING has changed. Like how retarded are people on HN?
surgical_fire 4 minutes ago [-]
They would also be owning a company that now would have +20B in debt.
They now own ebay. They would include in that math 20B in debt plus Gamestop.
This sounds like a pretty bad deal for ebay investors.
seydor 12 minutes ago [-]
I believe ebay should put itself up for sale on ebay instead.
oybng 4 minutes ago [-]
With the state ebay is in, I'd welcome anyone else to run it
manwithnoplan 57 minutes ago [-]
A lot of the comments here seem to assume that a smaller public company can’t acquire a larger one, which just isn’t true.
A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections.
Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is impossible?
lijok 49 minutes ago [-]
There’s one comment as of the time of your post that makes this assumption - you could have replied to them directly.
manwithnoplan 48 minutes ago [-]
It is implicitly implied in many comments.
wwalexander 36 minutes ago [-]
“Implicitly implied” is redundant. Either of these phrasings would suffice:
> It is implicit in many comments.
> It is implied in many comments.
darkwater 4 minutes ago [-]
Well, it's called "tautology" and it's a perfectly valid rhetorical device.
manwithnoplan 22 minutes ago [-]
[flagged]
lijok 20 minutes ago [-]
Links?
Hackbraten 24 minutes ago [-]
> A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections.
Isn’t the assumption that it’s impossible intuitively justified if you have no background in finances? A small fish usually can’t devour a bigger fish either.
Also, all those terms you mentioned mean nothing to me. You can’t search for what you don’t know exists.
dgellow 51 minutes ago [-]
I see a single comment mentioning it is impossible. No sign of a collective declaration. I think you’re overreacting
manwithnoplan 47 minutes ago [-]
I think you are under reacting.
sschueller 34 minutes ago [-]
But if it all goes sour nobody will be held accountable and two not one company are ruined.
I don't see how such leveraged acquisitions should be legal.
rplnt 43 minutes ago [-]
Example from quite some time ago: Avast buying AVG. The value of AVG was around twice that of Avast.
ceejayoz 41 minutes ago [-]
AOL/TimeWarner, Kmart/Sears… lots of prominent examples.
i_think_so 9 minutes ago [-]
Speaking as someone who used to know absolutely nothing about the world of high finance, yes, it is too much to ask.
Before I started paying attention to such things I wouldn't have known a single one of those terms to even begin googling.
And let's be honest here. A smaller company saddled with big debt buying out an even larger company really doesn't make logical sense. It makes financial sense, which is subject to different laws of mathematics, probably involving the waiter's check pad in an Italian bistro.
petesergeant 56 minutes ago [-]
> Is it too much to ask the Hacker News commentariat to do one quick search
Are you new here?
moomin 1 hours ago [-]
Very specific corners of the internet are losing their minds right now.
fuzzfactor 51 minutes ago [-]
A low tide leaves very few boats afloat, but these are lighter-than-air craft.
i_think_so 13 minutes ago [-]
This very specific corner of the internet has no idea how your metaphor is supposed to work, which is why I like it so much.
ulfw 3 minutes ago [-]
Every day our world is becoming just that tiny little bit more stupid
maz1b 1 hours ago [-]
Not a headline I ever thought I would see. Kinda crazy how meme stocks and retail hype has led to this.
Are there still large shorts on GameStop? If this goes through I assume it will wipe those out?
schnitzelstoat 54 minutes ago [-]
I guess if people use eBay a lot to sell used games then there is something of an overlap there. Otherwise, it seems pretty weird.
harvey9 45 minutes ago [-]
That sneaker company that pivoted to data centers set the 'weird' bar pretty high.
GameStop has physical stores so could be a place to send, collect from or even verify high value eBay items.
fg137 40 minutes ago [-]
Based on my own experience with GameStop, that will convince me to stop using eBay completely.
gizajob 39 minutes ago [-]
EBay is running a platform (very successfully) not a pawnshop.
mchonedev 35 minutes ago [-]
If I understand correctly, I think the collectibles market is more in line with what GameStop is looking at here. They recently got into the trading card game including grading services via PSA.
dgellow 32 minutes ago [-]
Is that market really that large? That sounds very niche, but I don’t know the collectible world
bilekas 28 minutes ago [-]
If they can do some accounting trickery to pull this off then they deserve it. Makes zero sense to me but I did not think GameStop had even close to that in assets.
hdndjsbbs 19 minutes ago [-]
It's the leveraged buyout playbook. You buy a company and use its own assets to secure a loan. Then you "find efficiencies" (strip it for parts to pay yourself and the creditors).
TrackerFF 1 hours ago [-]
So they want to pay half of that with a meme stock?
jofzar 1 hours ago [-]
I was seeing the news about this calling it GameStop eBay takeover and I assumed it was eBay buying GameStop and I was like, huh that doesn't really make sense for eBay to buy GameStop but maybe they want the physical locations?
How the hell can GameStop buy eBay, this is insane.
mrweasel 36 minutes ago [-]
The other way around made more sense to me as well. I don't see this going well for eBay, but I also don't entirely know how well their business is doing.
Here local eBay "clones" aren't in a good place and have been left as ghost towns after Facebook Marketplace.
olalonde 37 minutes ago [-]
"I like the stock" - GameStop
wigster 16 minutes ago [-]
i don't understand why ebay looks SO terrible. It seems like some broken website where css failed to load.
woodydesign 58 minutes ago [-]
From storytelling to investor POV, does it a good story to frame this as entering the AI era through a digital service that everyone familiar with?
rasz 6 minutes ago [-]
Reminds me of Sierra On-Line being acquired by CUCk International in 1996.
techterrier 16 minutes ago [-]
is this for real? Or just to get gamestonks back into the news for another whirl on the wheel of meme?
vasco 1 hours ago [-]
The Gamestop CEO is an interesting character, he grew Chewy and sold it, did a massive play on Apple stock during the pandemic and used that to buy a 9% stake in Gamestop over time, rode the hype to accumulate $9B while turning the company around and closing stores that weren't profitable and making it a money making budiness again. And now they already own 5% of eBay on top.
Along the way he says some ridiculous Trump stuff and wasted a bunch of time on NFTs but the eBay play seems interesting at least. It's one of the best internet soap operas to follow. For comparison AMC was put in the same "meme stock" bag at the time and you can see how they managed to ride the hype. So it's not just memes.
dcminter 1 hours ago [-]
I look forward to today's Money Stuff!
Eldt 1 hours ago [-]
He's a meme trader manipulating retailer investors, following Elon's footsteps
CWwdcdk7h 16 minutes ago [-]
I mean he pumped and dumped BBB, and those people (or should we call them apes?) still love this guy.
memaw12341234 1 hours ago [-]
those guys have a very strong track record of getting their way lately
Rekindle8090 1 hours ago [-]
[dead]
kome 44 minutes ago [-]
ebay is still "old internet", and genuinely useful and well built. enshittification is incoming...
consp 34 minutes ago [-]
For an old internet company they sure know how to enshittify global selling with their Global Shipping Program also know as Global Shitting Program.
robotswantdata 1 hours ago [-]
[dead]
Rendered at 11:24:19 GMT+0000 (Coordinated Universal Time) with Vercel.
CEO gets paid "only if GameStop achieves a market capitalization of $20 billion." Buying a $55bn company would certainly achieve that quickly. I'm not sure how they'd manage that (buy with what? Memes?), other than the should-be-illegal process of putting debt on the acquired company's balance sheet.
Otherwise take out a $20b loan and put it in the bank. Assets increase $20b, job done.
GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt.
The most beneficial thing is how even proposing this shifts peoples' perception of Gamestop from a beloved but struggling brick and mortar chain to a successful business
Becoming Radio Shack / Microcenter, as far as 3D Printing and DIY electronics, seems like it intersects with their target audience more, but they're also probably pretty short on space for that.
I dont see it as a good value, but it's the only thing I see as a synergy. Otherwise it's just more garbage capitalism.
How is this defined?
GameStop had revenues of $3bn last year and eBay was $10-12bn, so combined it's $13-15bn. A net income increase of 1.2bn on that gross is a tall order for M&A efficiencies. Especially difficult when the two companies have essentially zero operational crossover, besides business admin. It doesn't seem likely to me that merging eBay's accounting/legal departments into GME's (and similar efficiency gains) is going to save anything close to a billion across the two entities.
IIRC, Gamestop recently had a "trade-in anything" day, where they accepted a variety of products for store credit. Seems an awful lot like this was some sort of test for accepting products in-store for eBay listings, or something along those lines. They already accept trading cards to send off to PSA for grading and to place into their lootbox system.
As far as efficiencies go, you can see things like shifting shipping by individual sellers to mass shipping to/from a warehouse, a much heavier footprint in collectibles, and perhaps quality control that reduces buyer disputes (this one's a bit iffy).
Sigh. The synergy argument, once again.
While historically most mergers don't work out particularly well, I'm absolutely sure this time will be different.
Just sample from these with replacement sufficiently many times and you're all set. At the very least, you'll owe people so much money that they'll have a massive interest in helping you.
> Our offer is $125.00 per share, comprising 50% cash and 50% GameStop common stock
Even if you magically included all existing GameStop stock in the offer, it still would not comprise 50% of $55.5B.
EDIT: looks like it's not impossible and I misunderstood. It's a proposed change of leadership with a $25B injection of cash to sweeten the deal. GameStop would issue shares which would capture the original eBay value (since GameStop would own eBay after the trade), making that part a wash. At least assuming people owning eBay stock currently would value the combined company at at least the sum of their parts, which is a big if.
The whole thing seems incredibly dubious and fishy. The eBay board should vote this down which is why the CEO of GME has already realised that and said he’ll appeal to the shareholders directly. If eBay wanted to load themselves with twenty billion dollars of unnecessary debt and extra complications which would kill the company then they could do it themselves. They’re not in that kind of business.
When the merger concludes, GameStop-eBay will issue the former shareholders of eBay $27.5bn of GameStop-eBay stock, and $27.5bn of cash. (“Cohen said GameStop has a commitment letter from TD Bank to provide up to $20 billion in debt financing” and “GameStop has around $9 billion in cash on its balance sheet to put toward a deal” [1].)
[1] https://www.wsj.com/business/deals/gamestop-is-offering-to-b...
Imagine yourself (if your morality allows) a typical Wall Street CEO at the center of this hurricane force money windfall driven by internet memes. What else would you do, other than ride it all the way to the bank using the most dubious financial shenanigans known to man?
The issue is the non-cash portion of the offer. They claim that the remaining 27.5B is covered by GameStop stock. But that's more than double the market cap of GameStop.
Also, eBay shareholders can vote down the acquisition if they don't think the deal is good for them.
If you word it like this it's just a hostile proposed change of leadership. Weird way to apply to become CEO of eBay, but sure.
The shareholders have to vote for it, though.
They now own ebay. They would include in that math 20B in debt plus Gamestop.
This sounds like a pretty bad deal for ebay investors.
A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections.
Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is impossible?
> It is implicit in many comments.
> It is implied in many comments.
Isn’t the assumption that it’s impossible intuitively justified if you have no background in finances? A small fish usually can’t devour a bigger fish either.
Also, all those terms you mentioned mean nothing to me. You can’t search for what you don’t know exists.
I don't see how such leveraged acquisitions should be legal.
Before I started paying attention to such things I wouldn't have known a single one of those terms to even begin googling.
And let's be honest here. A smaller company saddled with big debt buying out an even larger company really doesn't make logical sense. It makes financial sense, which is subject to different laws of mathematics, probably involving the waiter's check pad in an Italian bistro.
Are you new here?
GameStop has physical stores so could be a place to send, collect from or even verify high value eBay items.
How the hell can GameStop buy eBay, this is insane.
Here local eBay "clones" aren't in a good place and have been left as ghost towns after Facebook Marketplace.
Along the way he says some ridiculous Trump stuff and wasted a bunch of time on NFTs but the eBay play seems interesting at least. It's one of the best internet soap operas to follow. For comparison AMC was put in the same "meme stock" bag at the time and you can see how they managed to ride the hype. So it's not just memes.