GameStop Corp. announced on Sunday an unsolicited offer to acquire eBay Inc. for approximately $56 billion, combining cash and stock in the deal [1, 2]. The bid values eBay at roughly $55.5 billion to $56 billion, with GameStop proposing to pay $125 per share, which is about 20% above eBay’s closing price the prior Friday [1, 2].

Before making the offer, GameStop acquired an approximate 5% stake in eBay, becoming one of its largest shareholders [1, 2]. The payment would be structured as half cash and half GameStop common stock, with the option to issue additional shares as needed to complete the transaction [2]. GameStop CEO Ryan Cohen said, "We are offering half cash, half stock, and we have the ability to issue stock in order to get the deal done. But the full details of the offer on our website. We will see what happens" [2].

GameStop also secured a non-binding letter from TD Bank to provide around $20 billion in debt financing to support the acquisition [1, 2]. Cohen expects to find roughly $2 billion in annual savings within 12 months after closing, aiming to improve eBay’s profitability [1]. He added, "It makes us one of the largest shareholders. So they have a fiduciary duty to their shareholders to evaluate this proposal. This is a business that is under-earning and can make a lot more money. And GameStop is a good blueprint for that" [2].

GameStop’s current market value stands below $12 billion, while eBay’s market value is about $46 billion, making the deal a significant premium for eBay shareholders [2]. As of the offer announcement, Cohen confirmed that formal talks with eBay management have not yet started, noting the challenges ahead with the public company’s board and management incentives [2]. He said, "We are just starting. For obvious reasons, eBay is a public company, there's all kinds of perverse financial incentives from the board to the management team. So there's only one way to approach something like this" [2].

eBay confirmed receipt of the offer on Monday and said its board would review the proposal [2]. Following the announcement, eBay shares surged as much as 13.4% in after-hours trading but remained below the offered $125 per share, reflecting some investor skepticism [2].

GameStop and eBay shareholders and boards now await formal discussions and further developments on the bid.