GameStop does not give up on its interest in eBay. Its CEO, Ryan Cohen, has regretted that the e-commerce platform’s board of directors rejected its acquisition offer, valued at more than 55.5 billion dollars, and has demanded that eBay shareholders have the opportunity to evaluate it. The executive’s reaction came a day after eBay declined GameStop’s unsolicited offer to buy the company, calling it “neither credible nor attractive.”
In a letter addressed to the chairman of eBay and in an interview published on GameStop’s corporate website, Cohen warns that they should not dismiss a proposal of 125 dollars per share without analyzing its substance, and adds that the economic data is clear and public: “eBay’s own shareholders deserve the opportunity to evaluate it.”
Cohen makes clear his intention to move forward and hinted at possible steps to try to achieve his goal. “I don’t want to make hasty decisions because we are dealing with people who make a lot of money and are not owners of the business, but we will do whatever it takes to present this proposal to the true owners of the company,” he states.
Cohen does criticize eBay’s board of directors harshly: “If we analyze it, they rejected our proposal and, in general, they were right. They said it was not attractive. And they are right, it is not attractive to the board or the management team because we would get rid of them. The board raised four million in fees last year. The CEO earns nearly thirty million a year.”
On May 4, GameStop, included in the group of meme companies (which are those companies with strong fluctuations in their stock value due to movements driven more by social media than by professional analysts), announced a takeover bid to acquire eBay for about 55.5 billion dollars. The proposal contemplates a price of 125 dollars per share, including securities and cash in equal parts, with a 46% premium. The operation was considered a bold move by Ryan Cohen, for taking control of a prestigious e-commerce company several times larger.
At the time of the announcement, eBay had a market capitalization almost four times greater than GameStop’s: 48 billion dollars after the initial rebound of the shares following the offer announcement, compared to 11.3 billion dollars of the bidding group. Similarly, eBay triples GameStop in business volume; 3.1 billion in the last quarter compared to 1.104 billion of the bidder.
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Against this backdrop, Cohen defends his management ability in the world of internet and e-commerce: “It is within my scope of competence. It is a business I understand. It is the second largest e-commerce asset in the United States, and it is a business that is not generating enough profits. Frankly, it is a business where I can step in and have a great impact in terms of short-term profitability, but, more importantly in the long term, it is something I want to lead. I want to own eBay.”
The executive states that he wants eBay to be a much bigger business. “It is a business I understand well thanks to my experience at Chewy. Physical retail is not within my scope of competence. E-commerce is my specialty. And, in my opinion, there is no asset with as much potential as eBay,” he insists.
In the initial takeover bid announcement, GameStop’s CEO communicated his intention to carry out a strong cost adjustment at eBay. In fact, he explained that the integration would allow cutting costs by 2 billion dollars in the 12 months following the closing of the operation and increase profitability, relying on a network of about 1,600 stores in the United States, which would serve as logistics infrastructure, product verification, and live commerce for customers.
Cohen, who would remain CEO after the integration, also said that the company had committed financing of up to 20 billion dollars to face the purchase of eBay, and already warned that, in case of rejection, he could start a battle for proxy voting to bring the offer directly to the e-commerce company’s shareholders.
