(AsiaGameHub) –   GameStop has confirmed a $55.5 billion bid to acquire eBay, with the offer structured as a combination of cash and stock. These rumors had circulated over the weekend.

The company stated its intention to obtain full ownership of eBay and aims to implement $2 billion in annual cost reductions within 12 months if the transaction is completed.

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Key Facts

• GameStop submitted an offer for $55.5 billion to purchase 100% of eBay.
• The proposal consists of half cash and half stock.
• eBay described the offer as unsolicited and non-binding.

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Cost Savings Are Central To The Proposal

GameStop intends to reduce expenses by approximately $1.2 billion in sales and marketing, $300 million in product development, and $500 million in general and administrative costs.

The company asserted that eBay already possesses strong brand recognition and therefore does not require current levels of marketing expenditure.

GameStop commented:

“In fiscal 2025, eBay allocated $2.4 billion to sales and marketing but only gained one million net active buyers (from 134 million to 135 million—a less than 0.75% increase).”

“Simply through cost-cutting measures, eBay’s diluted GAAP earnings per share from continuing operations could rise from $4.26 to $7.79 in the first year. Beyond savings, GameStop’s roughly 1,600 U.S. retail locations would provide eBay with a nationwide network for authentication, intake, fulfillment, and live commerce.”

However, securing funding presents a significant challenge. GameStop’s market capitalization stands just above $11 billion, and it holds about $9.4 billion in cash and liquid investments. It also has a “highly confident letter” from TD Securities for up to $20 billion in financing, although this commitment is not yet finalized.

This leaves an estimated funding shortfall of around $15 billion. While GameStop could issue additional shares, doing so would dilute existing shareholders.

CEO Ryan Cohen declined to directly address how the funding gap would be resolved during a CNBC interview:

“There will inevitably be increased leverage on the balance sheet to facilitate this acquisition. However, the business is positioned to generate substantially higher profits in the future due to improved operational efficiency.”

“When a company fails to grow its user base while spending $2.5 billion annually on sales and marketing, there is considerable room for cost optimization. The earnings potential, as outlined in our investor presentation, could double within a relatively short timeframe. Therefore, this represents a business capable of supporting greater leverage given its enhanced future profitability.”

As of now, eBay has not accepted GameStop’s offer. In its official response, the company noted that it had received “an unsolicited, non-binding acquisition proposal from GameStop” and intends to review the matter.