US video game retailer GameStop announced a takeover offer on Sunday to acquire eBay for approximately $55.5 billion, aiming to transform the online marketplace into a competitor against e-commerce giant Amazon.
GameStop is offering $125 per share through a combination of stock and cash—a 46 percent premium over the average stock price since the company began acquiring eBay shares on February 4, according to a release.
“EBay should be worth — and will be worth — a lot more money,” GameStop CEO Ryan Cohen said in an interview with the Wall Street Journal published Sunday.
“I’m thinking about turning eBay into something worth hundreds of billions of dollars,” he said. “It could be a legit competitor to Amazon.”
GameStop confirmed it had received a letter of commitment from TD Bank, an American subsidiary of the Canadian TD Bank Group, for approximately $20 billion in financing through a debt issuance.
In the press release, the company also stated it had approximately $9.4 billion in cash reserves as of January 31.
The company claimed it could generate $2 billion in annualized cost reductions within 12 months of the transaction’s completion. According to the release, these cost reductions alone would boost eBay’s comparable-store earnings per share from $4.26 to $7.79 in the first year.
However, Cohen told the Journal that if eBay’s management is not receptive to his offer, he will not hesitate to approach shareholders directly.
The Wall Street Journal pointed out that eBay’s next annual general meeting is scheduled for June, but the deadline for submitting resolutions has already passed.
At Friday’s close, GameStop’s market capitalization reached $11.89 billion, while eBay’s stood at $46.21 billion.