Ryan Cohen Says GameStop Can Issue Additional Stock To Get eBay Deal Done — This Analyst Is Skeptical About The Synergies

• Cohen also revealed that he intends to bring his entrepreneurial mindset to turn eBay into a much larger business if the company is successful in its acquisition bid for the e-commerce giant.
• He stated that he plans to leverage GameStop’s infrastructure and focus on collectibles to turn eBay into a much larger business.
• Cohen stated that he has not yet heard back from eBay or its representatives after GameStop announced its acquisition proposal.

GameStop Corp. (GME) CEO Ryan Cohen reportedly said that the company can issue additional stock to get the eBay Inc. (EBAY) deal done, as questions swirl about GameStop’s ability to finance the takeover.

During an interview with CNBC, Cohen offered limited clarity about how GameStop would finance its proposed eBay deal.

“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,” he said.

eBay shares were up nearly 10% in Monday’s pre-market trade, while GameStop shares were down about 3%. EBAY and GME were among the top trending tickers on Stocktwits at the time of writing.

Turning eBay Into A Much Larger Business

Cohen also revealed that he intends to bring his entrepreneurial mindset to turn eBay into a much larger business if the company is successful in its acquisition bid for the e-commerce giant.

He stated that he plans to leverage GameStop’s infrastructure and focus on collectibles to turn eBay into a much larger business.

“eBay has the second largest commerce franchise and there is a big opportunity to do something much larger and pull costs out of the system as well as accelerate revenue growth,” Cohen said, after GameStop proposed to acquire eBay for $125 per share, valuing the deal at $56 billion.

Have Not Yet Heard From eBay, Says Cohen

Cohen stated that he has not yet heard back from eBay or its representatives yet after GameStop announced its acquisition proposal. He added that eBay is a very entrenched business and noted that it will do whatever it can to protect itself.

“You have a very strong business and if it’s in the hands of a capable operator, it can be a much larger business,” Cohen added.

He also noted that GameStop’s position in eBay is currently under 5%. This comprises largely of derivatives, Cohen added, while noting that a small portion of it is stock.

Meanwhile, eBay confirmed on Monday that it had received an unsolicited proposal from GameStop.

“The Board will review this proposal with a focus on the value to be delivered to eBay shareholders, including the value of the GameStop stock consideration and the ability of GameStop to deliver a binding, actionable proposal,” the company stated.

Morgan Stanley Skeptical About Synergies Between eBay, GameStop

Morgan Stanley analyst Nathan Feather expressed skepticism about the potential synergies between eBay and GameStop, according to a report by SeekingAlpha. 

Feather also added that financing would be another key question on investors’ minds.

“Regardless of outcome, confirmation of an offer would demonstrate eBay’s increased potential strategic value,” he said.

GameStop expects $2 billion in annual cost savings within 12 months of closing the acquisition, with Cohen serving as the CEO of the combined entity.

EBAY stock is up 19% year-to-date, while GME stock is up 32%. The Invesco QQQ Trust (QQQ) is up 40% over the past 12 months, while the Vanguard Total Stock Market Index Fund ETF (VTI) is up 29%.

The Vanguard Small-Cap Index Fund ETF (VB) is up 31% during this period.

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Editor's Note: The headline has been edited to reflect Ryan Cohen's take on the possibility of additional stock issuance.