GameStop (GME) CEO Ryan Cohen says proposed eBay acquisition valued at $56 billion

The CEO of GameStop provided some details about the eBay deal to The Wall Street Journal.

GameStop CEO Ryan Cohen provided some details about the video game retailer's proposed offer to acquire eBay. The executive has told The Wall Street Journal that the company has accumulated a 5 percent stake in eBay and is offering to acquire the e-commerce company for $125/share, a $56 billion valuation.

GameStop has posted a press release about the offer to acquire eBay on its investor relations page.

In an exclusive interview with The Wall Street Journal, Cohen detailed the potential structure of the deal. He said that TD Bank has provided a commitment letter to provide approximately $20 billion in debt financing for this acquisition and that he would be looking to outside investors to make up for the rest of the funding. GameStop currently has $9 billion of cash and marketable securities on hand, so that leaves between $17-27 billion of additional funds required to acquire eBay at the proposed $56 billion valuation. This all depends on the structure of the deal.

Sources familiar with this deal tell WSJ that Cohen may reach out to Middle East sovereign-wealth funds to make up the gap in funding. “I’m thinking about turning eBay into something worth hundreds of billions of dollars, said the billionaire CEO of GameStop. He added that he believes he could build the combined entity into a "legit competitor to Amazon."

GameStop is in the middle of a corporate turnaround which could be derailed by poor execution of such a massive acquisition. Cohen is motivated to hit stock-based compensation goals that could unlock a $35 billion payday if he can get GameStop's valuation to hit $100 billion. With a market capitalization currently around $12 billion, it appears the former Chewy CEO is losing patience and is willing to take on a pile of debt to accelerate his company's growth.

An acquisition of eBay may be the shortcut Cohen needs to unlock a massive payday, and could put the newly combined entity in a better space to compete in the e-commerce sector. The proposed $125/share deal values eBay at $56 billion, which is over 20 percent higher than the closing price on Friday.

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