GameStop Corp. Chief Executive Officer Ryan Cohen said he will press on with efforts to acquire eBay Inc. even after the e-commerce company turned down his $56 billion takeover bid.
In an interview with Bloomberg TV on Thursday, Cohen said simply, "We're coming for eBay one way or another." He did not indicate whether he intends to raise the offer.
Cohen described a strategic vision in which the two businesses would be combined to form a substantially larger company. He set a target of turning the merged entity into a $1 trillion business and criticized eBay's management as having become complacent.
Part of Cohen's pitch involves leveraging what he called "eBay's rails" to establish a digital marketplace for video game items, an area he identified as an expanding revenue stream within the gaming industry. He also highlighted the potential for synergies between the companies' collectibles operations; collectibles already account for roughly 42% of GameStop's revenue.
On the topic of physical presence, Cohen proposed using GameStop stores as authentication centers for trading cards, naming categories such as Pokemon and sports cards as examples. "Once these businesses are together, we've got 1,600 nodes," he said, adding that those locations would be "within a 15 minute drive of maybe 80% of the population."
eBay's board rejected Cohen's bid earlier this year, calling the proposal "neither credible nor attractive." The board's statement cited concerns over uncertainty about financing, potential operational risks, and issues related to GameStop's governance.
Observers and investors have questioned whether GameStop could realistically acquire a larger company like eBay, even with what the article described as a highly confident letter from a bank. Concerns center on the amount of debt GameStop might need to assume to complete the transaction.
Addressing financing questions, Cohen said he has attracted interest from numerous investors since announcing the bid in May and asserted, "The pro forma company is going to be investment grade."
Earlier this month, GameStop shareholders approved a substantial increase in the company's authorized share count to facilitate a potential purchase of eBay.
When pressed about providing more details or submitting a higher offer, Cohen declined to divulge specifics, telling the interviewer, "I'm not going to negotiate against myself." He said he plans to ultimately present his proposal directly to eBay shareholders.
Market moves referenced in the coverage showed eBay down 1.86% and GameStop down 0.45% at the time noted in reporting.
Market and sector implications
The proposed deal, if it moves forward, touches e-commerce platforms, the gaming industry - particularly digital item markets - and collectibles retailing and authentication services. It poses questions about capital structure, integration risks, and the role of physical retail locations in supporting digital marketplaces.