In the battle for agency rights, "stockpiling ammunition"? After a $56 billion acquisition offer was rejected, GameStop quickly increased its holdings in eBay shares

According to Zhitong Finance APP, after the $56 billion acquisition offer was rejected by eBay's (EBAY.US) board, GameStop (GME.US) is further increasing its stake in eBay. Data shows that after raising its stake in eBay from 5.0% to 6.6% on May 20, GameStop further increased its stake from 6.6% to 7.8% on Thursday.

It is reported that GameStop plans to utilize its $9.4 billion cash and liquidity investment reserves, along with a high-confidence financing commitment from Toronto-Dominion Bank of up to $20 billion in debt financing, to support this large-scale acquisition. Cohen has previously publicly criticized eBay's long-standing capital allocation methods and stated that if the two companies merge, it is expected to reduce operating costs by $2 billion annually within 12 months after the transaction is completed. In terms of business structure, GameStop plans to transform its remaining approximately 1,600 offline stores into localized physical receiving, fulfillment, and live e-commerce authentication centers for eBay's collectibles business.

GameStop's latest increase in holdings indicates that despite eBay's board rejecting the acquisition offer, GameStop remains highly committed to driving significant changes at this online trading platform, while highlighting CEO Ryan Cohen's determination to push for major structural adjustments at eBay. Additionally, GameStop's continued increase in shares also suggests that a proxy battle for board seats may soon unfold to directly promote this transaction to eBay shareholders.

GameStop's "snake swallowing elephant" acquisition of eBay rejected

Earlier this month, Cohen formally proposed an acquisition plan to eBay shareholders: $125 per share, with 50% in cash and 50% in GameStop stock, which represented a premium of about 20% over eBay's then stock price. However, behind these seemingly generous numbers lies an unavoidable fundamental fact: GameStop's market value is just over $10 billion, less than a quarter of eBay's market value. Analysts from Bernstein and SocGen bluntly described the transaction as "financially unrealistic." This is not a merger of equals, but a clear case of "snake swallowing elephant."

Just a week after receiving the offer, eBay Chairman Paul Pressler clearly stated in a letter to Cohen that the unsolicited acquisition offer was "neither credible nor attractive," completely shutting the door on negotiations. In addition to fundamentally questioning the nature of the financing structure, eBay's board also pointed out the significant leverage and operational risks that the merged entity would face, even explicitly expressing concerns about "GameStop's governance and executive incentive measures"—which almost indirectly pointed to Cohen himself and his series of controversial public actions over the past week.

Financing fog

The core financial arrangement supporting this transaction is GameStop's plan to borrow $20 billion from Toronto-Dominion Bank to fund the acquisition. However, the problem is that even with $20 billion in debt financing, there remains a significant gap from the total consideration of $56 billion. Cohen has yet to detail the plan for raising the remaining funds. When repeatedly questioned in previous interviews about where this money would come from, Cohen has repeatedly fallen into awkward silence He just keeps repeating the phrase "half cash, half stock," but fails to provide any specific financing path.

The market has cast a clear vote of distrust on this financing plan. Michael Burry, the character behind the movie "The Big Short," announced shortly after the acquisition news broke that he had sold all his GameStop shares, writing on social media: "Never treat debt as creativity." Another well-known investor, Steve Eisman, who also gained fame for shorting during the financial crisis, sided with Burry, bluntly stating: "Debt is the problem."

More dramatically, Cohen himself attempted a "performance art" style effort to raise funds: he listed his GameStop memorabilia on eBay—including sports socks priced at $14,000—claiming this move was to "help fund the acquisition of eBay." A few hours later, his eBay account was permanently suspended, as eBay determined his activities posed a risk to the safety of the platform community.

This episode sparked heated discussions on social media but further eroded the seriousness of the deal. Critics characterized it as a "greenmail tactic" aimed at gaining attention or forcing the other party to compromise, while eBay took the opportunity to frame Cohen's entire operation as an "insufficiently serious" gimmick. A market observer commented: "In high-risk mergers, gimmicks can generate clicks but fail to impress lenders."

The Illusion of "Chemical Reaction" After the Merger

It is worth mentioning that a key logic underpins the persuasive power of the acquisition blueprint Cohen outlined—GameStop's 1,600 retail stores across the U.S. could be transformed into authentication centers for collectibles on the eBay platform, while also serving as distribution points for e-commerce products. Cohen also proposed to convert some stores into live sales studios, allowing sellers to broadcast products to buyers in a mix of QVC, TikTok, and Twitch.

This "OMO" concept of online and offline integration appears to have a certain strategic appeal on the surface, but as revealed by Wedbush analysts, there is a deep-seated contradiction—GameStop's revenue primarily relies on sales of gaming hardware and collectibles, with only $3.6 billion in revenue over the past 12 months, while eBay's business logic is that of a light-asset, high-commission online marketplace, placing the economic models of the two in completely different commercial universes.

The synergy of the merger is less a viable business plan and more an uncolored sketch. As market analysis points out, GameStop's strategy of accelerating store closures is fraught with execution risks, and layering the operational demands of a global e-commerce platform onto this retail network still in transformation is far more complex than the current management team's public capabilities can demonstrate. Credit rating agency Moody's previously stated that the proposed transaction would be "credit negative," noting that it would increase eBay's debt from $7 billion to $31 billion.

If Cohen achieves the established goal of cutting about $2 billion in costs within the first 12 months post-transaction, some financing risks may be alleviated. Unlike traditional mergers, these cuts will not come from savings in merged operations. Instead, Cohen stated he would reduce expenditures in areas such as sales and marketing, replicating the efficiency he discovered at GameStop

eBay's Confidence in Rejecting the Acquisition: Independent Transformation is Working

One important reason eBay dared to firmly reject the acquisition offer from GameStop is that its independent operating strategy is on a rare positive track in recent years. Under the leadership of CEO Jamie Iannone, eBay continues to advance its strategic transformation towards high-value categories, focusing on consumer-to-consumer businesses such as collectibles, fashion, and electronics, which currently account for about 70% of total merchandise transaction volume and have achieved double-digit growth.

The first quarter financial report data for 2026 provides strong evidence: the company achieved revenue of $3.1 billion, a year-on-year increase of 19%; GMV reached $22.2 billion, a year-on-year increase of 18%. The number of active buyers remained at 136 million, with a 6% increase in active buyers in the U.S. and an 8% increase in enthusiastic buyers. Advertising revenue grew by 27% year-on-year to $581 million, and the AI-driven seller tool "Magical Listing" has generated over 500 million AI product listings.

The light asset model and approximately $80 billion in annual platform transaction volume mean that eBay can expect stable cash flow under far fewer variables than a patchwork commercial conglomerate. The company achieved annual revenue of $11.6 billion and GMV of about $80 billion—facing these concrete numbers, Cohen's accusations against eBay management of "wasting marketing expenses" seem pale and unsupported. Prissler emphasized in his letter: "eBay's independent development plan is working, and a merger would jeopardize growth and profitability."

Moreover, since eBay successfully shifted its business towards younger consumers, the company's stock price has risen 24% year-to-date. Mixing these stocks with the more volatile GameStop stock may be a risk that eBay shareholders are unwilling to take.

A Proxy Battle May Be Coming

With eBay's board's firm rejection, market attention has quickly turned to the possible next phase—a proxy battle. Cohen revealed his cards when he initially made the offer—if eBay's board rejected it, he would bypass the board and make an offer directly to eBay shareholders, pushing for the deal by replacing the board. Now, GameStop's continued increase in its stake in eBay indicates that this proxy battle may be imminent.

This is not an easy path. eBay's shareholder structure means that to win the proxy battle, Cohen needs to persuade a group of institutional shareholders that are entirely different from GameStop's retail fan base. These individuals are voting with their stock prices.

Since the disclosure of the acquisition offer on May 4, eBay's stock price has risen slightly, while GameStop's stock price has fallen nearly 20%. The market has given its judgment in real monetary terms: investors do not believe Cohen can finance or acquire at the proposed price, and they rewarded eBay for resisting interference. Don Bilson, head of event-driven research at Morgan Stanley, provided a succinct summary: "It is certain that Cohen's initial attempt to sell this deal did not go smoothly." The voice of the market has become clear - the financing plan has yet to be finalized, and the probability of a transaction remains slim, but this does not hinder the arrival of a potential proxy battle storm. For this Wall Street acquisition drama, the coming weeks will be crucial: Will Cohen officially initiate the proxy solicitation process? Can he present a specific financing plan that is convincing enough for skeptical institutional investors? Will eBay activate a poison pill plan or other more aggressive defensive measures?