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GameStop makes $55.5B takeover offer for eBay

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Re: GameStop makes $55.5B takeover offer for eBay

#91

Post by panick21_ »

sschueller wrote: post #58
manwithnoplan wrote: post #25

A lot of the comments here seem to assume that a smaller public company can’t acquire a larger one, which just isn’t true. A quick search for how leveraged acquisitions, stock-for-stock deals, financing commitments, or tender offers work would answer most of the objections. Is it too much to ask the Hacker News commentariat to do one quick search before collectively declaring that something they don’t understand is i…

But if it all goes sour nobody will be held accountable and two not one company are ruined. I don't see how such leveraged acquisitions should be legal.

Is there anywhere a good breakdown of these leveraged acquisitions. Like a video or something that breaks down how that exactly works and why its legal and why the acquired company goes along with it. Its seems like such a strange mechanism. And the history of it.

Re: GameStop makes $55.5B takeover offer for eBay

#92

Post by SideQuark »

pjc50 wrote: post #2

Important background: https://investor.gamestop.com/news-releases/news-details/202... CEO gets paid "only if GameStop achieves a market capitalization of $20 billion." Buying a $55bn company would certainly achieve that quickly. I'm not sure how they'd manage that (buy with what? Memes?), other than the should-be-illegal process of putting debt on the acquired company's balance sheet.

Market cap will price in the debt, as it always does. Empirical evidence (dig through Google scholar) finds that cash assets, debt, profits, settlements, and the like, all are reflected in market cap changes at over 99% accuracy (the 1% is from measurement noise, so it may well be 100%).

Making debt of that form illegal would kill any company that needed money to stay afloat, such as during some emergency, or war, or COVID, or tons of events that companies regularly survive.

Re: GameStop makes $55.5B takeover offer for eBay

#94

Post by wazdra »

darkwater wrote: post #86
wwalexander wrote: post #54

Earlier quoted context omitted.

“Implicitly implied” is redundant. Either of these phrasings would suffice: > It is implicit in many comments. > It is implied in many comments.

Well, it's called "tautology" and it's a perfectly valid rhetorical device.

A tautology is a sentence vacuously true. This is called a pleonasm.

Re: GameStop makes $55.5B takeover offer for eBay

#95

Post by xbmcuser »

gizajob wrote: post #48
orlp wrote: post #7

GameStop doesn't have (even close to) $55.5B. Their offer from the letter is literally impossible: > Our offer is $125.00 per share, comprising 50% cash and 50% GameStop common stock Even if you magically included all existing GameStop stock in the offer, it still would not comprise 50% of $55.5B. EDIT: looks like it's not impossible and I misunderstood. It's a proposed change of leadership with a $25B injection of c…

I don’t understand why eBay shareholders will suddenly want GME memestock and find any interest in voting for this.

they will be getting 20% more than what Ebay is worth today

Re: GameStop makes $55.5B takeover offer for eBay

#96

Post by sspiff »

hdgvhicv wrote: post #4
pjc50 wrote: post #2

Important background: https://investor.gamestop.com/news-releases/news-details/202... CEO gets paid "only if GameStop achieves a market capitalization of $20 billion." Buying a $55bn company would certainly achieve that quickly. I'm not sure how they'd manage that (buy with what? Memes?), other than the should-be-illegal process of putting debt on the acquired company's balance sheet.

Wouldn’t that debt knock down the market cap as much as the value Otherwise take out a $20b loan and put it in the bank. Assets increase $20b, job done.

There is precedent for this kind of trickery being played.

For example, Honeywell acquired Garrett AiResearch, a well known manufacturer of turbochargers for combustion engines, through a series of mergers.

Later on, it loaded them up with debt (over $1.5 billion, mostly asbestos related indemnity obligations from other parts of the business), before spinning them out as an independent entity again. Two years later, Garrett filed for bankruptcy claiming it was succumbing to the unsustainable debt burden placed upon it by its former owner.

Re: GameStop makes $55.5B takeover offer for eBay

#97

Post by vessenes »

gizajob wrote: post #71
bilekas wrote: post #63

Earlier quoted context omitted.

I don’t understand either but wouldn’t they still be owning eBay? Just with GME?

I’m not totally sure how it would be structured but if GME is the purchaser then the merged company would be listed under GME and eBay would become a brand in the GME group and no longer a stock listed under the eBay ticker. The whole thing seems incredibly dubious and fishy. The eBay board should vote this down which is why the CEO of GME has already realised that and said he’ll appeal to the shareholders directly.…

There is, literally, nothing fishy about this offer. It’s a cash and stock offer from a public company to public company shareholders. We could call the financial or shareholder benefits to ebay dubious (I don’t hold any opinion about this) but this is a very aggressive offer, and allows the chance for GME to keep some cash - if enough shareholders of ebay opt for stock, then they’ll have cash available after. Plus they’d keep whatever current net assets ebay has.

ebay was at like 100 before the offer went out, it’s trading up to 120 or so in early hours this morning, so speculators and institutional desks do not find this offer fishy or dubious - they are pricing it as likely to be pretty well received.

As a side note, one of many plays you might make in this situation is what Cohen has done here; they bought a bunch of options. Those options are now worth a lot; before the letter if it was all options, they controlled $2b of EBAY shares, today that’s $2.6b. We might imagine the options at least doubled the underlying return. The market had not priced in a rapid jump to $120 when he bought them. If the deal closes, then this will put at least another billion or two of liquid capital into GME.

Re: GameStop makes $55.5B takeover offer for eBay

#98

Post by jfengel »

alchemist1e9 wrote: post #82
cyanydeez wrote: post #62

Earlier quoted context omitted.

yeah, their shops arnt sized to do much more than UPS style package movement. I dont see it as a good value, but it's the only thing I see as a synergy. Otherwise it's just more garbage capitalism.

> garbage capitalism. How is this defined?

Moving money around and pretending that there is more of it.

Re: GameStop makes $55.5B takeover offer for eBay

#99

Post by gizajob »

xbmcuser wrote: post #95
gizajob wrote: post #48

Earlier quoted context omitted.

I don’t understand why eBay shareholders will suddenly want GME memestock and find any interest in voting for this.

they will be getting 20% more than what Ebay is worth today

Once. Followed by a tank in price and descent into chaos.

Re: GameStop makes $55.5B takeover offer for eBay

#100

Post by vessenes »

CWwdcdk7h wrote: post #73
cyanydeez wrote: post #51

Earlier quoted context omitted.

man, those GME bagholders are gonna love diluted shares.`

They already increased total number of stock by +39% in last 12 months, GME will squeeze the last penny from those people.

… and the stock has not dropped 39%, in fact it’s trading about where it was a year ago. Shareholders have been content to let Cohen add to the balance sheet, adjust operations and make a large move. This is one such move. And GME is up 5+% in pre trading, so shareholders are generally positive about this idea.
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