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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

#181

Post by jjallen »

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.

I’m disappointed and surprised you left out half of the conditions that grant him this compensation. You only included the one that suggests that all he has to do is buy a bigger company with GME stock. It was literally the first paragraph of your link:

“ The award is divided into nine tranches that are eligible to vest only if the Company achieves both a “Market Capitalization Hurdle” and a corresponding “Cumulative Performance EBITDA Hurdle”.”

This changes basically everything. He can’t just buy any bigger company. The company has to earn way more cash flow, cumulatively, as well.

Re: GameStop makes $55.5B takeover offer for eBay

#183

Post by dwedge »

cyanydeez wrote: post #135
vessenes wrote: post #100

Earlier quoted context omitted.

… 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.

the shareholders of GME operate under the delusion that there's gonna be another magic short squeeze.

I operate under the delusion that it was a $400 gamble and there is no point selling stock that I forgot I even owned at all, when it's such a small amount.

Re: GameStop makes $55.5B takeover offer for eBay

#184

Post by DSMan195276 »

59percentmore wrote: post #88
OtherShrezzing wrote: post #50

Earlier quoted context omitted.

>GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt. GameStop had revenues of $3bn last year and eBay was $10-12bn, so combined it's $13-15bn. A net income increase of 1.2bn on that gross is a tall order for M&A efficiencies. Especially difficult w…

I don't think this is a serious assessment. For years, the core business of both companies has been facilitating the flow of used goods. Gamestop has moved strongly into collectibles recently, with a partnership with collectible grading firm PSA and the introduction of (essentially) lucrative trading card lootboxes, whereas eBay has capitalized on the same expansion of the collectibles market with new live/flash auct…

Well let's be clear, the "trade-in anything" day was a fancy discount day. They gave everybody $5 for whatever they brought in, online you can read from employees that they just donated or threw it all away, no attempt to actually keep any of it to sell.

That said IMO the biggest difference in the two situations you're describing is that EBay is not in the business of buying the items to then sell later, they just facilitate transactions between two parties and some of the logistics (depending on the seller). They're similar as far as dealing with "used goods" but the actual design of the business and risk being taken on is very different.

EBay also not really lacking what you're describing - there are fufillment centers that can be used for EBay listings, there's the EBay "Authenticity Guarantee" program for cards, they already own TCGplayer which does all of this for trading cards way better than GameStop does, etc.

Perhaps somehow these things could be improved by GameStop but I can't imagine it being significantly better than it currently is.

Re: GameStop makes $55.5B takeover offer for eBay

#185

Post by trillic »

doginasuit wrote: post #138
aykutseker wrote: post #119

2021: a Reddit short squeeze kept GameStop from going under. 2026: GameStop is bidding $55B for eBay, a company 4x its size. If it lands, this might be the strangest full circle moment public markets have ever produced.

Is it still riding the meme stock wave or has GameStop made a turnaround?

Liquid Assets:

May 2020: $570.3 million

Jan 2026: $9.013 billion

Re: GameStop makes $55.5B takeover offer for eBay

#186

Post by acdha »

fontain wrote: post #83
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.

Cohen is already rich rich, his GameStop compensation doesn’t really matter much. The eBay acquisition could be a strategy to juice his compensation but I think it is much more likely he does believe that he can achieve his stated aims, which will financially benefit him much more in the long term.

> Cohen is already rich rich, his GameStop compensation doesn’t really matter much

I think this argument is much stronger in the opposite direction: if his motivations were not focused on accumulating wealth, he’d be retired or running some kind of charity once he was that far past the point where he had to work. The fact that he’s not suggests that he derives his self-identity from wealth and the guys who do that are rarely satisfied at mid-tier rich.

Re: GameStop makes $55.5B takeover offer for eBay

#187

Post by dpoloncsak »

sspiff wrote: post #96
hdgvhicv wrote: post #4

Earlier quoted context omitted.

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,…

I believe this is what they call the 'Texas Two-Step'

Re: GameStop makes $55.5B takeover offer for eBay

#188

Post by Ozzie_osman »

nashashmi wrote: post #171
stevefan1999 wrote: post #122

Earlier quoted context omitted.

So you mean...marrying someone but transfer all the personal debt to the others, then divorcing so that I have no responsibility whatsoever? Not even an obligation to settle for the debt just like disappeared through an expired relationship?

Is there a legal term for this kind of restructuring of debt?

"Private Equity"

Re: GameStop makes $55.5B takeover offer for eBay

#189

Post by cj »

jjallen wrote: post #181
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.

I’m disappointed and surprised you left out half of the conditions that grant him this compensation. You only included the one that suggests that all he has to do is buy a bigger company with GME stock. It was literally the first paragraph of your link: “ The award is divided into nine tranches that are eligible to vest only if the Company achieves both a “Market Capitalization Hurdle” and a corresponding “Cumulative…

I was under the impression that it was either or, not both. Either reach market cap goal or EBITDA.

Re: GameStop makes $55.5B takeover offer for eBay

#190

Post by izzydata »

cyanydeez wrote: post #51
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…

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

Perhaps that is part of the scam here. Meme stock buyers will think this means something and will spend more on worthless shares so that ebay executives can sell.
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