GameStop Shares Plummet 10% Amid Concerns Over $55 Billion eBay Bid Financing
GameStop shares tank 10% as CEO skips fundraising question on $55 billion eBay deal
The Economic Times
Image: The Economic Times
GameStop's shares fell over 10% to $23.84 following CEO Ryan Cohen's evasive responses regarding the financing of the company's $55.5 billion bid for eBay. The offer, structured as half cash and half stock, raises questions about the remaining $16 billion needed to complete the deal.
- 01GameStop shares dropped more than 10% after CEO Ryan Cohen avoided questions on financing.
- 02The proposed $55.5 billion bid for eBay is structured as a half-cash, half-stock deal.
- 03GameStop has approximately $9.4 billion in cash and plans to secure $20 billion in debt financing.
- 04The company has built a 5% stake in eBay but lacks clarity on the remaining funds needed.
- 05Cohen is prepared to take the bid directly to shareholders if necessary.
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Shares of GameStop, a video game retailer, fell over 10% to $23.84 on Monday amid concerns about the company's ability to finance its unexpected $55.5 billion bid for eBay. CEO Ryan Cohen's responses during a CNBC interview raised doubts, as he struggled to address questions about the funding strategy. The bid is structured as a half-cash, half-stock deal at $125 per share, with GameStop planning to use around $9.4 billion in cash and potentially $20 billion in debt financing from TD Securities. However, this leaves a $16 billion gap in funding. Cohen stated that GameStop has built a 5% stake in eBay and described the latter as underperforming. He indicated that if necessary, he would take the proposal directly to shareholders through a proxy fight. eBay has acknowledged the bid but will not comment further until its board reviews the offer.
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The decline in GameStop's stock price may affect investor confidence and could impact its ability to raise funds for the eBay acquisition.
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