TLDR
- GameStop CEO Ryan Cohen is pursuing a hostile $56B takeover of eBay after the company rejected the unsolicited offer
- Moody’s warns total combined debt would hit ~$31.4B — a 400%+ increase from eBay’s standalone structure
- Pro forma free cash flow would be tightly squeezed, even with GameStop’s targeted $2B in annual synergies
- eBay’s board called the offer “neither credible nor attractive,” citing financing, governance, and operational concerns
- Notable investor Michael Burry has already exited his GME stake, flagging concerns over debt and dilution
GameStop’s $56B bid to acquire eBay is running into a serious wall — and it’s made of debt.
GME stock has been at the center of market chatter since CEO Ryan Cohen revealed the unsolicited takeover offer. eBay’s board flatly rejected it, calling it “neither credible nor attractive.” Cohen responded by pledging to go hostile, meaning he plans to take the proposal directly to eBay shareholders and bypass the board entirely.
The deal would be structured as half cash, half stock. At $56B, it’s one of the largest proposed transactions in e-commerce history — and a massive stretch for a company with GameStop’s balance sheet.
What the Numbers Actually Look Like
Moody’s laid out the math and it’s not pretty. eBay currently carries roughly $7.2B in standalone debt against LTM EBITDA of about $3.1B, putting gross leverage at around 2.3x. Manageable on its own.
But add in $20B in transaction financing plus GameStop’s existing ~$4.2B in debt, and total combined debt balloons to around $31.4B. That’s a 400%+ jump relative to eBay’s current capital structure.
Moody’s estimates annualized interest costs on the new debt could exceed $1B. eBay generated roughly $900M in free cash flow in 2025. GameStop added about $600M in its last fiscal year.
Even combined, the math is tight — especially when you factor in the cash costs needed to actually achieve the synergies GameStop is promising.
GameStop is targeting around $2B in annualized synergies within 12 months of closing. The bulk of those savings — 60% — would come from sales and marketing cuts, with the rest split between G&A and product development. Moody’s puts the deleveraging potential at roughly 3.25x if synergies are fully realized, but that’s a big if.
Credit Rating Uncertainty Clouds the Path Forward
Getting investment-grade credit status for the combined entity is seen as a potential condition of the deal. Bloomberg flagged that outcome as uncertain given the debt load involved.
That uncertainty matters. Without investment-grade ratings, borrowing costs could be higher, making the already-thin free cash flow math even harder to work.
GameStop has quietly built a roughly 5% stake in eBay, which gives it some standing to push the proposal directly to shareholders. That sets up a possible proxy fight at eBay’s next shareholder meeting.
Meanwhile, high-profile investor Michael Burry has already exited his GME position, citing concerns over debt levels and potential dilution. Insider selling has also been reported, adding to the noise around the deal.
GameStop filed to increase its authorized Class A shares ahead of all this, which some investors read as preparation for a stock-based financing component.
The situation remains fluid. Watch for any revised terms from GameStop, movement on a proxy slate, or updates on co-financing arrangements.
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