GameStop's shares fell more than 10% on Monday as questions emerged about how the company would finance its surprise $55.5bn bid for eBay.
In an interview with CNBC, Ryan Cohen, GameStop's CEO, skirted repeated inquiries about how the video games retailer could afford the deal, saying he didn't understand the questions.
A letter published on GameStop's website outlines a half-cash, half-stock proposal to acquire eBay at $125 a share, using about $9.4bn in "cash on hand", and a $20bn in potential debt financing from TD Securities. Adding that to GameStop's market capitalization, valued at about $11bn, brings the total to around $40bn – $16bn short of what it offered in its unsolicited bid.
CEO's Vague Responses Raise Red Flags
"Where is the rest of the money coming from?" asked the CNBC journalist Becky Quick, following questions from Andrew Ross Sorkin, both co-anchors of the network's morning talkshow, Squawk Box.
"I don't understand your question," Cohen replied. "We're offering half cash, half stock, and we have the ability to issue stock to get the deal done. But the full details of the offer are on our website." GameStop did not respond to a request for comment.
The video game retailer's most recent market valuation was about $12bn as of Friday, a fraction of eBay's worth of $46bn. The games company rose to viral internet fame during the meme-stock craze in 2021, which turned Cohen into the movement's figurehead and dubbed him the "meme king" by his online followers.
No Talks Yet with eBay
Cohen said he had not had any conversations with eBay about the proposal, which eBay confirmed in a statement on Monday. The company declined to comment further until its board of directors had fully considered the proposal.
