US video game retailer GameStop made a takeover bid on Sunday to buy eBay for about $55.5 billion in an attempt to turn the online marketplace into a competitor to e-commerce giant Amazon.
Gamestop is offering $125 per share in a combination of stock and cash, a 46 percent premium over the average stock price since it began acquiring shares in eBay on February 4, it said in a release.
“EBay should be worth — and will be worth — a lot more money,” GameStop CEO Ryan Cohen said in an interview with the Wall Street Journal published Sunday.
“I’m thinking about turning eBay into something worth hundreds of billions of dollars,” he said.
“It could be a legit competitor to Amazon.”
GameStop confirmed it had received a letter of commitment from TD Bank, an American subsidiary of the Canadian TD Bank Group, for approximately $20 billion in financing through a debt issuance.
In the press release, the company also said it had about $9.4 billion in cash reserves as of January 31.
It stated it could generate $2 billion in annualized cost reductions within 12 months of the transaction’s completion.
These cost reductions alone would boost eBay’s comparable-store earnings per share from $4.26 to $7.79 in the first year, the release said.
But if eBay’s management is not receptive to his offer, Cohen told the Journal he will not hesitate to approach shareholders.
EBay’s next annual general meeting is scheduled for June, but the deadline for submitting resolutions has passed, the WSJ pointed out.
At Friday’s close, GameStop’s market capitalization reached $11.89 billion, while eBay’s stood at $46.21 billion.
