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GameStop makes $55.5B takeover offer for eBay

bbc.co.uk

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Re: GameStop makes $55.5B takeover offer for eBay

#101

Post by ryandamm »

sigmoid10 wrote: post #61
ceejayoz wrote: post #15

Earlier quoted context omitted.

Isn’t that just a https://en.wikipedia.org/wiki/Leveraged_buyout ?

That's just for the cash part. The stock part makes no sense. For this 50/50 deal to work in principle, they'd need to issue around a billion new shares, which would massively dilute the existing ~450M shares. So Ebay shareholders would suddenly own 70% of Gamestop after the deal. It's also highly questionable if investors actually believe the combined stock is worth that much, so the stock price would probably fall…

This is not atypical; smaller company “buys” the larger company with debt on the larger company’s books. The blended shareholder mix is mostly the larger company; management comes from the smaller company.

The one I was most familiar with was the Discovery “acquisition” of Warner Brothers. Though apparently that’s a little complicated because AT&T was divesting itself of Warner.

Re: GameStop makes $55.5B takeover offer for eBay

#103

Post by crispyambulance »

harvey9 wrote: post #38
schnitzelstoat wrote: post #29

I guess if people use eBay a lot to sell used games then there is something of an overlap there. Otherwise, it seems pretty weird.

That sneaker company that pivoted to data centers set the 'weird' bar pretty high. GameStop has physical stores so could be a place to send, collect from or even verify high value eBay items.

> ...sneaker company that pivoted to data centers set the 'weird' bar pretty high...

"Weird" is the wrong word for Allbirds. "Fraud" is far more fitting. They obviously have no intention running an AI-datacenter business and are doing it for the stock-price rush. A small number of people will be laughing all the way to the bank, and everyone will forget Allbirds in short order.

Ebay has a history of being legit, though they have had a long list of uncanny acquisitions themselves (including Skype, which they later sold for a stiff loss). It's a pity they couldn't just execute on their core business and are now being acquired themselves by an entity using sketchy financial shenanigans.

Who's going to stop a few rich people with a pile of money and a stated intent of doing something they have no intention of doing? No one, I guess. I mean, there's plenty of examples. Supermicro is still listed on NASDAQ even though one of their founders was caught smuggling export-controlled GPU's in Supermicro servers to the tune of 2.5 billion dollars a couple months ago.

Re: GameStop makes $55.5B takeover offer for eBay

#104

Post by gizajob »

vessenes wrote: post #97
gizajob wrote: post #71

Earlier quoted context omitted.

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 t…

The end of your post negates the first line of it.

Re: GameStop makes $55.5B takeover offer for eBay

#105

Post by vessenes »

orlp wrote: post #13
Lionga wrote: post #12

Earlier quoted context omitted.

Have your ever heard of debt? They have a 20B line secured from TD.

Yes, that goes into the '50% cash' part of the offer. With a 20B credit line and 7.5B cash from their own coffers (which they claim to have, so let's believe them on their word there), you cover the cash portion. The issue is the non-cash portion of the offer. They claim that the remaining 27.5B is covered by GameStop stock. But that's more than double the market cap of GameStop.

With the approval of the board of directors (in most cases), a company can simply create new shares and give them to whomever they like.

I would guess that this information will bother you.

If it helps, because many public company executives are compensated on earnings per share, most C level teams are incentivized to buy back shares, thus decreasing the denominator for the EPS calculation without changing fundamental economics of the company.

If this also bothers you, you should guess what Buffet says and thinks about those two dynamics, and then read up on it, and you will learn something interesting about public markets!

Re: GameStop makes $55.5B takeover offer for eBay

#107

Post by ryandamm »

wongarsu wrote: post #32
airstrike wrote: post #10

Earlier quoted context omitted.

It's newly issued stock, a common form of making acquisitions cheaper

How is a 20bn company going to issue 27bn worth of stock? Or are they just going to pretend the newly issued shares are valued the same per share as existing stock is right now?

Because it acquires an asset worth roughly that much, it’s neutral. GME is (probably!) not doing a huge at-the-market offering, they’re creating the shares and immediately giving them to eBay shareholders.

In practice the price paid for the company being acquired is usually a bit higher than the market value (so the shareholders take the deal), and the market usually punishes the acquirer a bit and the resulting entity’s stock will fall a bit. (This is most definitely not investing advice.)

Re: GameStop makes $55.5B takeover offer for eBay

#108

Post by alchemist1e9 »

jfengel wrote: post #98
alchemist1e9 wrote: post #82

Earlier quoted context omitted.

> garbage capitalism. How is this defined?

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

You mean leverage/borrowing? Pretty time tested mechanism of risk taking in free markets.

Re: GameStop makes $55.5B takeover offer for eBay

#109

Post by jfengel »

vessenes wrote: post #97
gizajob wrote: post #71

Earlier quoted context omitted.

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 t…

TD Bank also believes it will work, i.e. return them a profit.

They've seen the detailed plans and I haven't. But they're the ones with real skin in the game. It seems like an opportunity for them to lose their shirts.

So yeah, eBay shareholders should take TD Bank's free money and run.

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