Key Takeaways
- Cohen rejected a potential $35 billion pay package to focus on eBay acquisition plans.
- GameStop will release detailed plans supporting its proposed $56 billion eBay bid.
- Investors remain skeptical about how GameStop would finance the massive takeover.
GameStop CEO Ryan Cohen has declined a potential $35 billion performance-based compensation package and plans to release additional details this week about the company’s proposed acquisition of eBay, the video game retailer said Tuesday.
Cohen said he wants GameStop’s leadership team to remain focused on improving operations and advancing the GameStop eBay acquisition bid, which eBay rejected after a roughly $56 billion cash-and-stock takeover offer made by GameStop in May.
GameStop announced the compensation package in January. The award depended on Cohen increasing the company’s market value by more than 10 times and significantly improving profitability.
The company said it will publish additional materials outlining the strategic rationale behind the proposed GameStop eBay acquisition and provide details on how a combined company would operate. An eBay spokesperson declined to comment on GameStop’s latest statement.
Investors question funding for deal
The proposed acquisition has drawn attention across Wall Street because of the size difference between the two companies.
GameStop’s market value is nearly $10 billion, while the offer valued eBay at about $56 billion. Analysts, bankers, and lawyers have questioned how GameStop would finance such a large transaction.
EBay’s board previously rejected the proposal, describing it as “neither credible nor attractive.”
Speculation has grown in recent weeks over whether Cohen will pursue alternative strategies to advance the takeover effort. Investors are expected to closely examine the materials GameStop plans to release later this week.
Cohen joined GameStop’s board in January 2021 and became chief executive in September 2023.
Also Read: E-Bay Cuts 6% of Workforce
Turnaround efforts boost results
Under Cohen’s leadership, GameStop has returned to profitability through aggressive cost-cutting measures, including the closure of hundreds of stores.
The company reported a 14% increase in quarterly revenue earlier this month, driven by strong demand for collectibles. GameStop also announced that its board approved a new $2 billion share repurchase program.
For the quarter ended May 2, GameStop reported net sales of $835.3 million, up from $732.4 million during the same period a year earlier.
Cohen has argued that combining GameStop and eBay would create a stronger e-commerce competitor capable of challenging larger online retail platforms, including Amazon.
The planned presentation is expected to provide investors with a clearer picture of the GameStop eBay acquisition strategy, financing plans, and long-term goals as it seeks support for one of the largest proposed deals in the retail sector.
