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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

#311

Post by WJW »

consp wrote: post #224
getnormality wrote: post #212

Earlier quoted context omitted.

> 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?

In the modern world if you are a bank you will be bailed out eventually, thus your problem becoming everyone's problem.

The 2023 mini banking crisis has its own wiki page and it's quite informative. Of the three banks involved, one bank saw its shares drop 97%, another "shareholders lost all invested funds" and the third got auctioned off for pennies on the dollar. No investors were bailed out.

Banks go bankrupt all the time. Community Bank and Trust of West Georgia went bankrupt just 3 days ago. The Metropolitan Capital Bank & Trust that went bankrupt back in January. 99% of the time the investors are completely wiped out. Bailouts almost never happen, which is precisely why it's such big news when it happens.

Re: GameStop makes $55.5B takeover offer for eBay

#312

Post by jakemauer »

teknologist wrote: post #218

Is eBay just a hive of scams now? Try searching for a Mac Studio with 512gb of RAM for example. I know it's a highly sought after item, but there are so many sellers with 0 reviews supposedly selling these at suspiciously low prices. What's going on here?

Same thing if you search for a PS5 Pro. And I have no idea how these aren’t taken down.

Re: GameStop makes $55.5B takeover offer for eBay

#313

Post by jnellis »

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…

Was this not lampooned directly in "40 Year Old Virgin" where a young Jonah Hill tries to buy some disco boots at an ebay store but can't because you have to go through the website.

Re: GameStop makes $55.5B takeover offer for eBay

#314

Post by 59percentmore »

graemep wrote: post #192
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.

They are paying half in GameStock equity. They will issue new shares so they will buy Ebay of $55bn, but add only $20bn debt. Its good for GameStock management who will end up running a much bigger business. https://investor.gamestop.com/news-releases/news-details/202... Game Stock management is essentially claiming that they can run Ebay better than the current management so Ebay shareholders will end up better off…

It depends. If Gamestop is able to find the efficiencies that the CEO is claiming, EPS jumps between 50 and 100 percent. Gamestop shareholders get diluted down to owning a smaller piece of a much bigger earnings pie. That's if you don't engage in any conspiracy theories about how many shares retail traders really own (don't go down that rabbit hole).

Suffice it to say, the Gamestop's price floor has gone up each time it's been diluted in the past few years. Perhaps lower highs, but higher lows. And a company that can afford to try a stunt like this.

Re: GameStop makes $55.5B takeover offer for eBay

#315

Post by TSiege »

taeric wrote: post #303
TSiege wrote: post #298

Earlier quoted context omitted.

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.

A cosigner is different than what's happening in leveraged buy outs. A Cosigner is financially responsible if the debtor cannot pay back their portion of the loan. In a Leveraged buyout the purchaser does not take on financial liability for the debt, that is all placed on the company being purchased. This means that if the purchaser isn't even the cosigner in this scenario; the company being purchased is the sole entity responsible for repayment. So if GameStop goes through with this, but Ebay can't repay the debt than Ebay would suffer graver consequences than GameStop

Re: GameStop makes $55.5B takeover offer for eBay

#316

Post by 59percentmore »

CWwdcdk7h wrote: post #177
59percentmore wrote: post #118

Earlier quoted context omitted.

In this case, if the deal goes through at the price given, eBay's liquid assets are untouched. The cash portion is paid out entirely through the loan and Gamestop's cash.

> $20 billion in debt financing This debt will carried by company resulting from merge. It might be not classic leveraged buyout but if they have any trouble with repaying it, it will end in asset liquidation all the same.

That's true. But they also have a $6 billion cash cushion to try to service that debt.

Re: GameStop makes $55.5B takeover offer for eBay

#318

Post by 59percentmore »

DSMan195276 wrote: post #184
59percentmore wrote: post #88

Earlier quoted context omitted.

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 fa…

Can you tell me where your local eBay fulfillment center is? I can tell you where my local Gamestop is (no, not that one, the other one).

Re: GameStop makes $55.5B takeover offer for eBay

#319

Post by ryandrake »

dingaling wrote: post #304
shmatt wrote: post #263

Earlier quoted context omitted.

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.

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

Super true. You can actually search for the exact brand you want and not get a search result page full of brands XIAOLE, LLKAPOO, JEMROK, QPPNSS, VRINHH.

Also, I don't really know why, but I have much greater confidence on eBay that I'm not going to get something counterfeit or unsafe.

Re: GameStop makes $55.5B takeover offer for eBay

#320

Post by TSiege »

Ajedi32 wrote: post #307
awakeasleep wrote: post #305

Earlier quoted context omitted.

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...

The problem is that people can take loans without financial liability (not how home purchases work) and drive profitable businesses (which are good for the economy) into the ground (bad for the economy and society).

No one is worried about the bank making the loan in this situation. They are concerned that PE is buying up large parts of the economy using debt they aren't responsible for, which makes them irresponsible owners because they do not face consequences when the moves fail

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