--- title: "Is the aim of the acquisition merely to boost stock prices? GameStop's \"snake swallowing elephant\" acquisition of eBay raises doubts about its motives, and arbitrageurs are keeping their distance" type: "News" locale: "en" url: "https://longbridge.com/en/news/285659671.md" description: "GameStop proposed to acquire eBay for $56 billion, but merger professionals are skeptical about the deal. Despite the acquisition offer being a 20% premium over eBay's stock price, the market lacks confidence in the transaction, and arbitrage investors are staying away. The details of the deal are vague, there is a significant funding gap, and the pressure of equity dilution is substantial, leading the market to question Cohen's motives for the acquisition, believing it may be aimed at inflating the stock price" datetime: "2026-05-08T03:43:03.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/285659671.md) - [en](https://longbridge.com/en/news/285659671.md) - [zh-HK](https://longbridge.com/zh-HK/news/285659671.md) --- # Is the aim of the acquisition merely to boost stock prices? GameStop's "snake swallowing elephant" acquisition of eBay raises doubts about its motives, and arbitrageurs are keeping their distance According to Zhitong Finance APP, on the surface, GameStop (GME.US) has thrown a shocking $56 billion proposal to acquire eBay (EBAY.US), which seems to hold substantial returns for investors willing to bet on this unusual transaction. However, the reality is that merger and acquisition professionals are not optimistic about this deal. The acquisition is orchestrated by GameStop's leader, billionaire Ryan Cohen, and was officially announced on Monday. GameStop proposed to acquire eBay for $125 per share in cash and stock, representing a premium of about 20% over eBay's closing price last Friday. As of last Friday, GameStop's market capitalization was approximately $12 billion, while eBay's was much larger, with a market cap of about $46 billion. As of Thursday, eBay's stock price was around $107, indicating a price difference of about $18 from GameStop's acquisition offer. In fact, since the announcement of the acquisition proposal, this price gap has continued to widen, indicating a lack of confidence in the market regarding this transaction. The difference between GameStop's bid and eBay's stock price remains significant. ![c92e72d511bcc8dd7d8ad1b6b2a81600.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260508/1778210371296088.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Under normal circumstances, arbitrage investors are often eager to bet on large mergers and acquisitions, but this transaction is fraught with doubts, and industry insiders are steering clear. The most critical issue is the severe lack of details regarding the transaction structure, making it difficult to position arbitrage trades or assess the probability of the deal closing. Many market participants even question whether Cohen has ulterior motives behind this acquisition. In addition to the commitment from TD Bank to provide $20 billion in debt financing, GameStop itself holds about $9 billion in cash and owns 5% of eBay's shares, but it still faces a significant funding gap for equity financing. Moreover, TD Bank's financing commitment is not guaranteed. Even if the cash portion is secured, GameStop would still need to issue a large number of new shares, potentially exceeding 1 billion shares. A rough estimate suggests that the issuance would double its existing equity, and it might even exceed the current statutory authorized share limit of the company. **Acquisition motives questioned by the market: No intention to merge, but to boost stock price?** Overall, the transaction terms are vague, the funding gap is enormous, and the pressure from equity dilution is unprecedented, completely deviating from the logic of conventional merger transactions. Arbitrageurs are skeptical about whether eBay will participate in this acquisition. Some market views speculate that Cohen's move is not genuinely aimed at merging but rather intends to use unconventional means to boost GameStop's stock price. Matt Osowitsky, a portfolio manager at Water Island Capital LLC, stated: "While there is some business synergy logic between the two companies, the likelihood of reaching a final agreement is extremely low. If this transaction were to close, it would essentially constitute a reverse merger, and convincing eBay shareholders of the value of holding GameStop stock would be extremely challenging." To draw attention to this transaction, Cohen also staged a publicity stunt: listing several personal items (including a pair of socks) on eBay, claiming it was for fundraising for the acquisition, ultimately attracting dozens of bids totaling tens of thousands of dollars Even if traders recognize the logic and valuation calculations behind this transaction, it is difficult to position for arbitrage in practice. Typically, arbitrageurs would buy the shares of the target company and short the shares of the acquiring company in a certain proportion based on the specific terms of the deal. However, GameStop has not disclosed the details of the per-share consideration, nor mentioned common protective mechanisms in stock mergers such as price range protection or caps. The unique market attributes of GameStop further complicate the transaction. Currently, the short-selling sentiment for this stock is already high, with short positions accounting for about 15% of the float, partly due to hedge funds engaging in arbitrage operations around its two convertible bonds totaling over $4 billion. **Uncertain transaction outlook, arbitrage traders remain cautiously observant** As a once-popular retail concept stock, GameStop has experienced multiple short squeezes, and its large base of retail supporters has significantly increased the cost and volatility risk of shorting the stock. After the acquisition news broke, retail funds simultaneously flowed into GameStop and eBay, attracting a large number of ordinary investors' attention. According to data from Vanda Research, Monday became the fifth highest net buying day for retail investors in GameStop over the past year. Louis Meyer, a capital events-driven strategist at Square Global, stated, "This transaction completely deviates from conventional patterns and is quite challenging from a purely arbitrage perspective." However, Meyer also pointed out that Cohen is not an ordinary transaction facilitator or industry consolidator. He entered GameStop as an activist investor, igniting the retail rally during the pandemic, and subsequently joined the company's management, never following the usual path. There are reasons to speculate that Cohen's true goal is to drive up GameStop's stock price, with the acquisition proposal merely a means to achieve that end. Meyer also noted that eBay shareholders are now aware of the company's acquisition value and may proactively reach out to other potential acquirers; the possibility of eBay acquiring GameStop in return cannot be ruled out. Currently, Cohen and GameStop are still waiting for an official response from eBay, which is assessing the unsolicited acquisition proposal. Until further details of the transaction are disclosed and the outlook becomes clearer, arbitrageurs believe there is no need to rush into action ### Related Stocks - [GME.US](https://longbridge.com/en/quote/GME.US.md) - [EBAY.US](https://longbridge.com/en/quote/EBAY.US.md) - [GMEU.US](https://longbridge.com/en/quote/GMEU.US.md) - [EBIZ.US](https://longbridge.com/en/quote/EBIZ.US.md) - [TD.US](https://longbridge.com/en/quote/TD.US.md) - [GME+.US](https://longbridge.com/en/quote/GME+.US.md) ## Related News & Research - [The 'Meme King' is turning eBay listings into takeover theater](https://longbridge.com/en/news/285463756.md) - [GameStop's CEO just gave the most awkward interview about how it would pay for eBay](https://longbridge.com/en/news/285080318.md) - [2 reasons GameStop should buy eBay, 1 reason it won't](https://longbridge.com/en/news/284991934.md) - [Ebay shares struggle to track GameStop's ambitious bid price on investor skepticism](https://longbridge.com/en/news/285055627.md) - [Here's How Much You Would Have Made Owning eBay Stock In The Last 10 Years](https://longbridge.com/en/news/285148594.md)