GameStop has made a $55.5bn (£40.9bn) unsolicited offer to take over e-commerce firm eBay, the video game retail chain said on Sunday, according to the BBC. The cash and stock offer values eBay at $125 a share, $20 more than the shares were valued at the close of New York trading on Friday. GameStop said in a statement that CEO Ryan Cohen would lead the combined company with a unique compensation package that includes no salary, cash bonuses, or golden parachute, and would instead be “compensated solely based on the performance of the combined company.”

Deal Structure and Financing

GameStop, which currently has a stock market valuation of around $11.9bn, said it has a commitment letter from TD Securities to provide around $20bn in debt to help finance the deal. The majority of the proposed cost cuts would be in eBay’s sales and marketing operation, where Cohen said he planned to lower spending by $1.2bn, though Higher spending in that area of the business had not produced more users for the “marketplace with near-universal brand recognition,” GameStop said. Cohen also plans to make $2bn of cost savings at the firm within a year of the deal being completed.

Industry Reactions and Outlook

“The proposal does not sound like a ‘terribly good offer’ as it would saddle eBay with GameStop’s debt,” said retail industry analyst Sucharita Kodali from market research firm Forrester, according to the BBC. She added that it makes sense for GameStop because it could lift its valuation by being linked with a larger company like eBay, “The truth is, we are not necessarily putting two strong companies together,” Kodali added. Shares in eBay jumped by more than 13% in after-hours trading when news of the potential offer emerged on Friday.

Strategic Rationale

Though GameStop has closed many of its stores in recent years, it still has around 1,600 outlets in the US — those shops would give eBay a national network for its “live commerce” and other business operations, Cohen said. Cohen, who became the GameStop boss in 2023, has criticized its slow shift into e-commerce, but the BBC has contacted eBay for comment.