GameStop Corp. (NYSE:GME) is considering abandoning its $56 billion takeover proposal for eBay Inc. (NASDAQ:EBAY) and could instead pursue a commercial partnership or joint venture with the e-commerce company, Bloomberg reported on Monday.
Chief Executive Ryan Cohen is reportedly evaluating an arrangement that would give eBay access to GameStop’s roughly 1,600 retail locations across the United States. Such a partnership could allow the two companies to strengthen their presence in higher-margin categories, particularly trading cards and collectibles.
As part of any potential agreement, GameStop, already one of eBay’s largest shareholders, would also seek representation on the company’s board.
GameStop shares have struggled since takeover proposal
GameStop originally approached eBay in May with an offer valued at $125 per share, structured equally between cash and GameStop common stock.
Since the proposal emerged, GameStop shares have fallen approximately 28%, while eBay stock has advanced 7.6%, changing the economics surrounding the original transaction.
EBay closed Friday at $111.98 per share, giving the company an equity market value of approximately $49.8 billion. Including debt, its overall valuation stands at close to $54 billion.
No final decision has been made, according to the report, and Cohen could still pursue other strategic alternatives rather than formally withdrawing the acquisition proposal.
GameStop builds major stake in eBay
GameStop’s takeover approach followed a significant investment in eBay that initially gave the video game retailer a stake of approximately 5%.
The company subsequently continued accumulating shares. By July 15, GameStop reportedly controlled 9.75% of eBay, making it the second-largest shareholder behind funds managed by Vanguard Group Inc.
Its substantial ownership position gives GameStop considerable exposure to eBay even if Cohen ultimately decides against pursuing a full acquisition.
A partnership could offer an alternative route for extracting strategic value from that investment without requiring GameStop to complete a transaction worth tens of billions of dollars.
Retail network could support collectibles strategy
Giving eBay access to GameStop’s extensive U.S. store network could create opportunities to combine the online marketplace’s scale with GameStop’s physical retail footprint.
Trading cards and collectibles are particularly relevant to both companies as they seek exposure to categories offering stronger margins and opportunities for cross-platform sales.
The proposed arrangement could potentially use GameStop stores for services linked to eBay transactions while allowing GameStop to benefit from eBay’s large online customer base.
Investors appeared moderately receptive to the possibility of an alternative to the takeover. EBay shares declined around 0.6% in pre-market trading on Monday, while GameStop gained approximately 1.4%.
With no final decision yet reached, the market will be watching whether Cohen proceeds with the $56 billion bid, withdraws the proposal or attempts to turn GameStop’s sizeable eBay investment into a broader strategic partnership.
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