Will the $56 Billion Acquisition Fall Through? GameStop Considers Shifting to Partnership with eBay

On Monday (10th), foreign media citing informed sources reported that GameStop (GME-US), led by CEO Ryan Cohen, is considering withdrawing its $56 billion acquisition proposal for eBay (EBAY-US) and instead exploring a partnership or joint venture.

According to sources, Cohen may propose allowing eBay to utilize GameStop’s approximately 1,600 physical stores across the U.S. to help both companies expand their market share in high-margin goods such as trading cards and collectibles. As one of eBay’s major shareholders, GameStop also seeks a board seat in eBay as part of the collaboration.

In May, GameStop proposed acquiring eBay at $125 per share, with 50% paid in cash and 50% in GameStop common stock. However, since the acquisition proposal, GameStop’s stock price has dropped 28%, while eBay’s has risen 7.6%, reducing the attractiveness of the stock-based payment component.

eBay closed Friday at $111.98, with a market capitalization of approximately $49.8 billion. Including debt, its enterprise value is close to $54 billion. Sources emphasized that GameStop has not yet made a final decision, and Cohen may still evaluate other options. Neither company immediately responded to requests for comment.

The acquisition proposal was originally a bold move by Cohen after GameStop built up a roughly 5% stake in eBay. GameStop continued to increase its holdings, raising its ownership to 9.75% by July 15, making it eBay’s second-largest shareholder, behind only funds under Vanguard Group.

Although GameStop currently holds $8.4 billion in cash, which could support a potential deal, its market value has dropped to about $8.6 billion, far below eBay’s. Noted investor Michael Burry previously exited all his holdings after the proposal, citing concerns that GameStop might take on significant debt for the acquisition.

GameStop was historically focused on physical video game retail, but as gamers shifted to online purchases, the company has significantly downsized its store footprint and attempted to transform its business. In 2021, it became a central target of a retail investor speculation frenzy.

eBay has faced challenges in recent years, including changing consumer habits and slowing growth, but its platform still generates around $80 billion in annual gross merchandise volume. In the 12 months ended March 31, approximately 136 million consumers worldwide made purchases on eBay.