GameStop's eBay Takeover: New Doubts About Planned Financing

The financing for GameStop's intended takeover of eBay is even more uncertain than previously known, as the video game retailer will only receive the $20 billion US dollars promised by a bank under extremely unlikely conditions. Bloomberg reports, citing informed sources. The money will reportedly only be provided if the merged company's debt receives a credit rating that is virtually impossible for companies with a comparable debt level. This could mean GameStop is missing about half of the amount needed for the purchase.

Financing Plans Increasingly Unclear

GameStop wants to take over eBay for 56 billion US dollars, the US video game retailer announced over the weekend. The well-known online marketplace was valued at around 46 billion US dollars before the announcement, while GameStop was only worth 12 billion. According to GameStop, cash reserves of 9.4 billion US dollars are available for the takeover. The company also cited a financing commitment of 20 billion US dollars from the bank TD Securities. However, doubts are now arising about this very commitment. Cohen has previously refused or been unable to explain how his company intends to raise the previously missing 16 billion US dollars.

Cohen took over as CEO of GameStop in 2023, having previously criticized the video game retailer's management as too slow and steadily increased his stake. GameStop made headlines in early 2021 when its stock price, driven by retail investors organized online, experienced a breathtaking rally. This resulted in enormous losses for hedge funds that had bet on a price drop. Under Cohen's leadership, GameStop has closed all its stores in Germany, among other things, and has primarily focused on the business with collectible cards and retro console games.

(mho)