GameStop, valued at about $12 billion, is attempting to acquire a much larger company through a half-cash, half-stock deal|Will Buckner|CC BY 2.0
After GameStop made a surprise unsolicited $56 billion bid for eBay, valuing the target at more than four times its own market capitalization, investors and analysts are questioning whether the deal is realistic.
Markets reacted quickly. GameStop shares fell 3.4% while eBay stock jumped 7.4% in premarket trading. GameStop is proposing to acquire eBay at $125 per share, but even after the rally, eBay shares remained well below that price, signaling doubts about the deal’s likelihood.
Funding questions rise
GameStop, a roughly $12 billion company, is attempting to acquire a much larger firm that was valued at $46 billion before the offer through a half-cash, half-stock deal. It has lined up about $9 billion in cash and indicated potential access to $20 billion in financing from TD Securities.GameStop has a debt load of $4.2 billion.
The company has secured a 5% stake in eBay.
Despite this, analysts say funding details remain unclear, raising concerns over whether the company can secure enough capital to complete the deal.
eBay signals confidence
The online resale marketplace’s board acknowledged the proposal but said no shareholder action is required. The company recently posted earnings of $1.66 per share, beating estimates by 5%, with revenue rising 19%, driven by a 33% jump in advertising.
Analysts highlight key risks, including financing challenges, a possible proxy fight, and regulatory scrutiny. With eBay shares up 137% since 2024, many believe it can continue to grow independently, making a takeover unlikely.
Even if the deal fails, analysts say it could attract other bidders. Retail investors have already increased trading in both stocks, raising the possibility of another meme-stock surge similar to 2021.