GameStop offers more than $50 billion in cash and stock to acquire eBay

The video game retailer GameStop has sent an unsolicited offer, valued at more than $50 billion, to purchase the online buying and selling platform eBay. It’s a pairing that seems a bit odd, given their very different businesses and the fact that GameStop is aiming to buy a much bigger company.

GameStop CEO Ryan Cohen has been wanting to invest in something for a while, said Michael Pachter, a former Wedbush Securities analyst who covered GameStop for more than 20 years.

“I thought he'd buy something for nine billion in cash, and instead he's trying to buy something for 50-plus billion in cash and stock,” Pachter said.

It’s kinda like a minnow attempting to eat a whale, said Eric Talley, a professor at Columbia Law.

GameStop said its stores could give eBay a physical space for “intake” and “fulfillment.” But there could be other reasons.

“Another one is just that they want to try to monetize the value of their stock, which still has quite a bit of froth and bubbleness inside it, before that bubble bursts. And that's not a terrible strategy to pursue,” Talley said.

Though convincing the counterparty is another matter altogether, he added.

“eBay has done remarkably well, especially over the last few years,” said Poonam Goyal, sector head and senior e-commerce and retail analyst at Bloomberg Intelligence.

Maybe, Goyal said , GameStop could help eBay with attracting younger customers.

But while there is some synergy in collectibles and video game sales, “some of the largest categories that eBay competes in, GameStop, just doesn't have those under its belt,” said Goyal. Think: Handbags, watches and autos.

In general, the less two companies are related or complement each other, the lower the chance the acquisition will create value, said Paul Nary, a management professor at the Wharton School.

“Economies of scale and cost cuts, that doesn't do it for me. Maybe best case scenario they will be able to get a billion or two,” he said.

Of course, eBay will get to consider if the offer is worth it.

“If this is an offer that can reasonably lead to creation of a lot of shareholder value, when they receive a high premium and close this deal,” Nary said, then the board is obligated to at least give it serious consideration.

Marketplace reached out to GameStop and eBay for comment, but did not hear back by the time of publication.