eBay To Sit Down This Week To Ponder On GameStop’s Longshot Buyout Offer, Says Report

• In the CNBC interview, Cohen repeatedly deflected questions about how GameStop — which has a market cap of roughly $12 billion— could finance the massive takeover, which values eBay at $55.5 billion 
• The bid, first reported by The Wall Street Journal, offers $125 per share in a 50/50 cash-and-stock deal, a roughly 20% premium to eBay’s Friday closing price
• eBay shares initially surged soon after the news of the proposal, but quickly gave up those gains and returned to pre-announcement levels, signaling market skepticism.

eBay’s (EBAY) board is reportedly scheduled to meet this week to review GameStop’s (GME) surprise non-binding proposal to acquire the e-commerce platform.

Semafor reported on the upcoming meeting, citing people familiar with the matter. However, the bid’s prospects have soured dramatically after Cohen’s evasive performance on CNBC’s “Squawk Box” on May 4, which alienated institutional investors and left many questioning the deal’s seriousness, the report noted.

The Contentious Interview

In the CNBC interview, Cohen repeatedly deflected questions about how GameStop — which has a market cap of roughly $11 billion— could finance the massive takeover, which values eBay at $55.5 billion

When pressed on the deal math and the funding gap, he told CNBC, “It’s on our website.” He added that the offer is structured as half cash and half stock, stating: “We are offering half cash, half stock, and we have the ability to issue stock in order to get the deal done.”

Cohen also appeared unclear or unwilling to engage on financing details and suggested a potential proxy fight, noting that GameStop has accumulated roughly a 5% stake in eBay, making it a fiduciary duty of the company to evaluate the proposal.

“This is a business that is under-earning and can make a lot more money. And GameStop is a good blueprint for that.” Cohen reportedly said without providing more details on the strategy.

The bid, first reported by The Wall Street Journal, offers $125 per share in a 50/50 cash-and-stock deal, a roughly 20% premium to eBay’s Friday closing price. If GameStop and eBay combine, Cohen would lead the combined company as CEO.

eBay shares initially surged soon after the news of the proposal, but quickly gave up those gains and returned to pre-announcement levels, signaling market skepticism. Adding to the headwinds, prominent investor Michael Burry sold his entire GameStop position following the announcement. Burry cited concerns that the deal would significantly increase GameStop’s debt load.

How Did Retail Investors React?

On Stocktwits, retail sentiment around  EBAY stayed within the ‘extremely bullish’ territory over the past 24 hours, while message volume remained at ‘extremely high’ levels.

Meanwhile, sentiment around GME stayed within the ‘extremely bullish’ territory over the past 24 hours, coupled with ‘extremely high’ retail chatter.

A Stocktwits user opined that the deal is the “best thing” that could happen for both GameStop and eBay.

Another user opined that eBay will likely reject the offer this week.

EBAY and GME stocks have gained 21% this year. 

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