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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

#211

Post by graemep »

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…

The first two market cap hurdle is almost certain to be achieved, and the second should be easy (its less than current market cap plus value of new equity to be issued).

Re: GameStop makes $55.5B takeover offer for eBay

#212

Post by getnormality »

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.

> the should-be-illegal process of putting debt on the acquired company's balance sheet.

I agree it's weird but ultimately the check against dumb lending is natural consequences for the lender, right? If you ask me for billions in loans for your zero revenue company and I give it to you, whose problem is that but my own?

Re: GameStop makes $55.5B takeover offer for eBay

#213

Post by reddalo »

idiotsecant wrote: post #167
reddalo wrote: post #132

Earlier quoted context omitted.

I'd be sad because eBay works great (even if their software is old and would need a complete rewrite).

Why does it need a rewrite if it works great?

Because it works great as a platform, and because I've been using it for 20 years.

But for a new user, it looks completely messy, with pages that are vastly different from each other and many sections that look exactly as they were in the early 2000's.

Re: GameStop makes $55.5B takeover offer for eBay

#214

Post by bhouston »

This is just a leverage buyout and it will likely result in the slow death of both parties while there is value extraction for those in control. Think Sears, Toys R US and similar.

The CEO has a very specific deal where he gets paid significant compensation for specific valuations, which this is likely to achieve. That is value extraction at the cost of shareholders who will be on the hook for the leveraged loan and which will likely wipe them all out over time.

Re: GameStop makes $55.5B takeover offer for eBay

#215

Post by svpernatvral »

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?

Scamming the state through private debt emission.

Re: GameStop makes $55.5B takeover offer for eBay

#216

Post by acdha »

jfengel wrote: post #109
vessenes wrote: post #97

Earlier quoted context omitted.

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.

TD Bank believes it will make them a profit. Their interests are not those of eBay’s shareholders: if they can juice the financials long enough to sell their loan, they don’t care if the company goes bankrupt the minute after that sale closes.

Re: GameStop makes $55.5B takeover offer for eBay

#217

Post by noitpmeder »

bhouston wrote: post #209
sheepscreek wrote: post #193

Earlier quoted context omitted.

Taking a $20b loan from TD Bank + sitting on $9b CASH + GameStop stock for the rest. They’ve made an interesting proposal around using 1600 GameStop locations for fulfilment. Smart if they can make it work. Update: Numbers still don’t add to $55b - I think there’s a $14b shortfall. Not sure about how they are planning to fund that.

> They’ve made an interesting proposal around using 1600 GameStop locations for fulfilment. Is that really an advantage? Fulfilment is always handled by a lot of places for the big e-retailers for returns, which is similar to what eBay needs for sellers. How much does Staples charge for its Amazon return fulfillment where you don't even need to wrap up the item? It is really popular: https://www.staples.ca/a/learn/am…

My kneejerk is that most consumers these days expect delivery for items purchased online, and allowing them to pick up their items at a brick and mortar probably isn't the issue.

Now, dropping off items you're selling? That probably removes a decent hurdle for many first-time/one-time users who aren't familiar with shipping (what box/label/insurance/padding/...).

Re: GameStop makes $55.5B takeover offer for eBay

#220

Post by weard_beard »

sheepscreek wrote: post #193
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.

Taking a $20b loan from TD Bank + sitting on $9b CASH + GameStop stock for the rest. They’ve made an interesting proposal around using 1600 GameStop locations for fulfilment. Smart if they can make it work. Update: Numbers still don’t add to $55b - I think there’s a $14b shortfall. Not sure about how they are planning to fund that.

GameStop has a standing approved agreement to issue up to a billion new shares. If you read the offer you will see it is 50% financed by GameStop stock.

They threw him a hardball today in his cnbc interview on this topic. $GME stock value would plummet short term, but the combined company would revalue much higher.

Current Gamestop shareholders would be diluted. They would own, proportionally, a much small slice of the combined company, but at a higher price point.

The framing of this as, "Ryan Cohen is diluting Gamestop shareholders in order to meet the terms of his enormous pay package" is disingenuous though, as his pay package is all stock. He's diluting himself too. He obviously has faith that, long term, the value of the combined company can substantially grow.

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