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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

#301

Post by octaane »

Long-time ebay seller here. I'm seeing comments floating towards the top that are essentially positing that the physical GameStop locations can be used as hubs where people can buy or sell their stuff in general (especially items that are 'pick-up only'). A pawn shop, basically.

Thing is, GameStop is, well, for videogames and videogame paraphernalia. It's not a general store. Doing this would turn them into a thrift shop, not a pawn shop, as people are trying to offload their carpets, desks, etc - bulky stuff.

I don't think this makes sense.

This does make sense when you consider the collectable market, another domain I'm involved in. Trading card games, specifically pokemon, have exploded over the last 5 years. GameStop is making a killing off of buying, selling, and grading these cards. Ebay is the primary marketplace to buy and sell those cards. There's also tax free havens ("Vaults") offered by multiple companies, grading service passthroughs, and scalping offered through ebay too.

Viewed through the above lens, that's what's prompting this offer, I think.

Re: GameStop makes $55.5B takeover offer for eBay

#302

Post by [deleted] »

nazgulsenpai wrote: post #296
JohnFen wrote: post #283

Gamestop is one of the companies that I refuse to do business with. eBay is a company that I am reluctant about, but use anyway. If this goes through, that will be the final straw that gets me to stop using eBay entirely. That would probably be for the best.

Why do you refuse to do business with GameStop?

[deleted]

Re: GameStop makes $55.5B takeover offer for eBay

#303

Post by taeric »

TSiege wrote: post #298
taeric wrote: post #252

Earlier quoted context omitted.

I mean, it is functionally the same as home loans? Would you be proposing a carve out that buying a house or car is ok this way, but nothing else?

It is a thorny question. The best way I can square the difference is that generally buying a house with debt is on the debtor and the house itself is collateral. The debtor can't pay back the loan the house is taken by the bank to be sold. Where as a PE leveraged by out the debtor is the target company. A company is different than real estate in that they are a legal entity that is now responsible to pay back a loan…

There is a long practice of having cosigners on home loans. This feels basically like that.

Which, granted, if you don't like the idea of establishing a company to take on loan responsibilities, I am not trying to offer a defense of that. Was a legit question of how you would structure it so that this is illegal, but home/auto loans are not.

Re: GameStop makes $55.5B takeover offer for eBay

#304

Post by dingaling »

shmatt wrote: post #263
giancarlostoro wrote: post #240

The original shorting of GameStop back in 2021 gave them a bit of a boost back into the green. While people were doing the GME to the moon, GameStop made more shares to sell, and paid off a bit of its debts, I think it made about a billion dollars in profit, they're still struggling, but it helped prolong their life. A friend of mine also pointed out and this made it click for me that it makes 100% sense, GameStop is…

eBay is dying, new competitors are being created constantly, and the big ones like Poshmark are getting more North American buyers and sellers. eBay has barely grown since their post covid slump Maybe eBay survives as an international site but even at that point, with $20B in debt this will just follow the regular PE playbook of shutting down after many layoffs and pivots The entire concept of, "I have $1,000 in the…

> Maybe eBay survives as an international site

I don't really know what alternative there is to eBay as an 'everything shop'. I can get specific screws there, or diff fluid, or a customised motorhome name sticker, or an old baseball cap for an airshow I attended in 2008.

And if I bought the wrong diff fluid I can sell it.

The main value over Amazon, though, is that the search works.

Re: GameStop makes $55.5B takeover offer for eBay

#305

Post by awakeasleep »

Ajedi32 wrote: post #290
shmatt wrote: post #268

Earlier quoted context omitted.

Home owns are owned by people, not the home itself. If someone fails to pay a loan, their own credit score will be impacted For these PE loans, its the new company that takes on the debt, not the buyer. Essentially any broke person can "afford" any trillion dollar company this way

Fair point, it's a corporation taking out the loan so there's nobody to go after if the company goes under the way there is if the value of your house tanks and you stop paying your mortgage. But doesn't the bank take that risk into account when deciding whether to issue the loan? Why should that be illegal?

The way I’m reading your question, it seems like you are looking for the law to follow philosophically consistent principles.

That is simply not the case and lawmakers can make any kind of law to shape the society how we wish. If leveraged buyouts are creating problems for the country, then it’s totally valid to make them illegal in certain cases.

Re: GameStop makes $55.5B takeover offer for eBay

#306

Post by TSiege »

true_religion wrote: post #282
shmatt wrote: post #268

Earlier quoted context omitted.

Home owns are owned by people, not the home itself. If someone fails to pay a loan, their own credit score will be impacted For these PE loans, its the new company that takes on the debt, not the buyer. Essentially any broke person can "afford" any trillion dollar company this way

Home loans are secured by the asset (the home). It's comparable to stock, but it's a less liquid asset. Any broke person can afford a trillion dollar loan, if they can convince the bank that their house is worth 1.8 trillion dollars. But is that really possible? Loan companies do due diligence so if GameStop is $A and eBay is worth $A + $B, then so long as $A/$B remains the same, the acquiring company owns two assets…

The difference is that when you buy a home the debt is in your name and you are required to pay it off. In a leveraged buy out wouldn't be to person taking out the loan, the debt is owned by the target of the purchase. If it were like a home loan and this deal goes south GameStop would go bankrupt and have to sell it's own assets to cover the losses. But in reality the debt from the deal would be owned by Ebay and if GameStop can't pay the loan back it'd force Ebay into bankruptcy and sell Ebay's assets. It's essentially a riskless move by GameStop and PE in general. Heads GameStop wins tails Ebay loses

Re: GameStop makes $55.5B takeover offer for eBay

#307

Post by Ajedi32 »

awakeasleep wrote: post #305
Ajedi32 wrote: post #290

Earlier quoted context omitted.

Fair point, it's a corporation taking out the loan so there's nobody to go after if the company goes under the way there is if the value of your house tanks and you stop paying your mortgage. But doesn't the bank take that risk into account when deciding whether to issue the loan? Why should that be illegal?

The way I’m reading your question, it seems like you are looking for the law to follow philosophically consistent principles. That is simply not the case and lawmakers can make any kind of law to shape the society how we wish. If leveraged buyouts are creating problems for the country, then it’s totally valid to make them illegal in certain cases.

The question I'm asking is: what problem? If a bank takes a risk and that risk doesn't pay off how exactly is that society's problem?

And yes, I do think laws should be based on consistent principles. I'm surprised you consider that a controversial point...

Re: GameStop makes $55.5B takeover offer for eBay

#308

Post by HillRat »

taeric wrote: post #252
fasteo wrote: post #228

Earlier quoted context omitted.

>>> should-be-illegal process of putting debt on the acquired company's balance sheet This is a basically a leveraged buyout (LBO). All private equity works this way. Yes, it should be illegal, or at least heavily limited. I highly recommend this book: "Plunder: Private Equity’s Plan to Pillage America"

I mean, it is functionally the same as home loans? Would you be proposing a carve out that buying a house or car is ok this way, but nothing else?

Say you take out a mortgage, then rent the house to a series of meth dealers to extract the rent while devaluing the property, and then default: you're still personally on the hook for any post-foreclosure deficiency judgment. One issue with LBOs is that, after extracting cash and fees, PE funds have various ways to extinguish liabilities that individuals don't, both by shielding the PE fund from debts and the use of bankruptcy and restructuring of the acquired company to discharge liabilities, including those from litigation.

There are various proposals to deal with this, but the most effective are probably imposing joint and several liability on certain kinds of litigation (breaking the "investor veil" and allowing rights of action against PE funds for the actions of their portcos) and limiting business judgment rule protection for directors and senior managers who approve LBO sales that are reasonably foreseeable to end in bankruptcy, which creates personal liability for fiduciaries. In other words, align the financial and personal interests of the individuals and companies involved with those of the acquired entity.

Re: GameStop makes $55.5B takeover offer for eBay

#309

Post by weard_beard »

3form wrote: post #299
weard_beard wrote: post #220

Earlier quoted context omitted.

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 t…

>He obviously has faith that, long term, the value of the combined company can substantially grow. Depends how much of them he has before and he will after, it might still be worth diluting if difference is vast. Also, why long term if short term could also do?

My take? The strategy is like a contractor fixing up houses. GameStop was the crappiest house on the block. He’s fixed it up and is using it as collateral to take out a loan and buy the dilapidated mansion next door (eBay). He’ll keep going until he’s gentrified the whole neighborhood using the value of the current business as collateral to buy the next. He wants to sell only when the value of the entire gentrified neighborhood reflects market rate for the work he's put in.
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