GameStop disclosed in a late Friday SEC filing that it now owns 43.4 million shares of eBay, representing 9.8% of the e-commerce company — a dramatic escalation of CEO Ryan Cohen's campaign to acquire a company roughly five times GameStop's own size.
The ownership stake jumped from roughly 5% in early May, when Cohen first informed eBay's board chairman of his intention to buy the company for approximately $56 billion. Over recent weeks, GameStop converted its economic stake from derivatives into common shares: it purchased 3.5 million eBay shares for roughly $381 million in June, and on Friday settled 39 million shares through put/call pairs.
EBay rejected Cohen's initial cash-and-stock offer in May, calling it 'neither credible nor attractive.' Wall Street has repeatedly questioned the financing structure, which relies heavily on a non-binding commitment letter from TD Securities for up to $20 billion in debt — contingent on the combined company achieving an investment-grade credit rating.
In a companion SEC filing, Cohen declared: 'I'm not going to call my shots, but we're coming for eBay one way or another.' In a Bloomberg Television interview, he criticized what he called 'a complete failure by the media to explain why this transaction makes sense' and said GameStop holds a 'highly confident' letter from its bankers with 'a lot of parties interested in this transaction.'
Cohen, who would run the combined entity, argues a GameStop-eBay tie-up would create a stronger competitor to Amazon. He is investing $500 million of his own money into the deal. GameStop shareholders recently approved increasing the company's authorized share count, providing additional flexibility for the pursuit.
When asked whether he would raise his bid, Cohen responded: 'I'm not going to negotiate against myself.'
