GameStop Corp. (NYSE:GME) and eBay Inc. (NASDAQ:EBAY) are trending after a report that GameStop is considering withdrawing its $56 billion takeover bid for eBay in favor of a potential partnership or joint venture instead.
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From Takeover to Partnership?
According to Bloomberg, GameStop CEO Ryan Cohen is weighing a proposal that would let eBay leverage GameStop’s roughly 1,600 U.S. retail locations, potentially helping both companies gain market share in high-margin categories such as trading cards and collectibles. As one of eBay’s largest shareholders, GameStop would also seek board representation as part of any such partnership. GameStop hasn’t made a final decision, and Cohen could still pursue other options, according to people familiar with the matter who spoke to Bloomberg on condition of anonymity.
Since GameStop’s initial offer in May, its stock has fallen 28% while eBay’s has climbed 7.6%. The original $125-a-share proposal was structured as 50% cash and 50% GameStop common stock. As of July 15, GameStop owned 9.75% of eBay, making it the company’s second-largest shareholder behind Vanguard Group funds.
Backdrop: Cash Reserves, Shrinking Retail, Investor Exit
GameStop has approximately $8.4 billion in cash that could be deployed toward a deal, though its own market value has fallen to $8.6 billion. The takeover pursuit followed a series of major changes at GameStop, which has shrunk its physical retail footprint as gamers increasingly shifted to buying software online.
Notably, investor Michael Burry said he exited his entire GameStop position after the eBay bid was announced, citing concerns about the debt GameStop could take on to fund the deal.
eBay, GameStop Stock Move In Opposite Directions
Price Action: At the time of publication, eBay shares are trading 1.25% lower at $110.58 and GameStop shares are trading 2.71% higher at $19.68, according to data from Benzinga Pro.
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