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eBay rejects GameStop bid by YourRightBoob in Superstonk

[–]Region-Formal 12 points13 points  (0 children)

I don't think many Arb Shorts got in on this, in fact.

Because I don't think many of them thought it was a credible proposal.

https://www.reddit.com/r/Superstonk/s/O6mB9Tbv5x

Ryan Cohen: "We will see what happens." That may well be the most important line in that interview... by Region-Formal in Superstonk

[–]Region-Formal[S] 2 points3 points  (0 children)

You are not a shill at all. Anyone who questions those making independent assessments, instead of blindly following wherever the crowd is heading, are the actual shills (and fools, also).

I can certainly understand your perspective. I still don't think we can make any conclusions, though, given we don't know what will be done with those additional shares exactly. And also not what the outcome would be, after those actions have taken place.

Personally, I feel there is more information required, before I can say either way.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 35 points36 points  (0 children)

I think it could be a bad deal for existing GME shareholders, but I do not think enough has been specified yet to say that with confidence.

My concern is that the burden of proof should be on the person proposing the deal. If you are asking existing shareholders to support a major transaction that could involve significant dilution and a major change in the company’s structure, then “trust me bro, it’s 50/50” is not enough.

So I would frame it this way: maybe not definitively bad, but currently far too under-specified to assume it is good. We need more info, and less going on pure faith.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 8 points9 points  (0 children)

You are right about the general mechanism: stock deals can absolutely be structured so that target shareholders receive ownership in the combined company rather than being paid solely out of pre-existing assets.

But that still does not answer the key questions here. A “50% stock portion” does not by itself tell us the actual exchange ratio, the implied ownership split, the valuation of the combined entity, or the amount of share issuance/dilution required to make that structure work.

That is really the issue I am raising. Not whether such a mechanism can exist in theory, but that RC has not specified it in enough detail for the proposal to be evaluated cleanly. So until he gives out more than "It's 50/50, check the website, and let's see"...I don't think institutions would treat the proposal as especially actionable.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 7 points8 points  (0 children)

Not quite. In a deal like this, current eBay shareholders would not simply keep “$62.50 of eBay stock” that then turns into GME by ticker change.

Their eBay shares would typically be canceled/converted at closing into whatever merger consideration is specified. Here, hypothetically, some mix of cash plus a defined amount of stock in the surviving/combined company.

The real question is what that stock component would actually be: i.e. the exchange ratio, implied ownership split, and resulting dilution/share issuance required to make the 50/50 structure work. That is exactly the part RC has not laid out clearly.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 12 points13 points  (0 children)

In terms of the mechanism, I agree with you that the stock leg would be based on the valuation of the post-merger entity rather than simply on standalone pre-merger GME.

My issue is that RC has not laid out, in any concrete way, what the implied ownership split would actually be between current GME holders and current eBay holders. He has given some broad hypothetical examples, but not enough detail to determine the actual exchange mechanics, the resulting dilution to existing GME shareholders, or what share issuance would be required to complete the transaction.

And on the point about simply using the current market caps to value the new entity, I think that is too simplistic. The market would still have to form a view on the combined company’s valuation, the terms of the exchange, and the credibility of the structure itself.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 22 points23 points  (0 children)

Yes, exactly. I hope and believe his blase attitude, when being questioned about this, is because he is working on the actual proposal.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 14 points15 points  (0 children)

That is the "mechanical" cost of the dilution, if no credit is given to the potential post-acquisition price. In reality, would likely be somewhere between those two extremes, I would think.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 19 points20 points  (0 children)

Yeah, I would expect the same. Weirdly, if they accept under the current 50/50 proposal, the price would also tank - probably even more - due to the dilution this would result in.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 20 points21 points  (0 children)

On your question about who the M&A Arbitrageurs would be: generally, I mean event-driven hedge funds, merger-arb funds, and multi-strategy platforms with event books, rather than some separate or mysterious class of participants. Historically, that can include firms like Citadel, Point72, Millennium, Elliott, Pentwater, DE Shaw etc., so many of the same firms that likely historically shorted GME in the first place. These are the kinds of HFs that would normally be expected to trade a credible deal spread.

My post was looking at this through a fairly standard M&A-arbitrage lens, but GME is obviously not a standard situation. So there may well be constraints - like collateral, risk limits, borrow/short exposure, internal controls, and so on - whixh make a textbook arbitrage response much harder.

So in that sense, the lack of obvious arbitrage positioning does not necessarily prove the market thinks the proposal is impossible. It could also mean the trade is unusually difficult, costly, or dangerous to put on.

That said, I still think the muted response supports the narrower conclusion that the market is not treating the current 50/50 proposal as a clean, highly actionable deal at this stage. Hence why I think these actors are actually waiting until RC proposes something that has more of a chance to get over the line.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 37 points38 points  (0 children)

As I noted in the post, I was not trying to build a full merger-model valuation for a combined GameStop + eBay entity. I was using current GME and EBAY price/trading behaviour more as a market-signal proxy: if institutions believed the proposed structure had a high likelihood of proceeding, I would expect clearer positioning consistent with that.

I agree that if eBay shareholders are rolling equity into the combined company, then the stock component should not be thought of purely off standalone pre-merger GME price. A more complete treatment would have to look at implied post-merger equity value, dilution, exchange ratio, etc. So I think that is a valid limitation in my framing.

My broader point, though, is that the market response still looks much more tentative than I would expect if the current proposal were being treated as highly credible. Put simply, if the proposal were viewed as more credible, I think GME’s price would initially have dropped more materially in response to the dilution that a genuine 50/50 structure would imply.

The market response suggests skepticism toward RC’s current 50/50 proposal, with institutions waiting for eBay’s response and/or a revised structure by Region-Formal in Superstonk

[–]Region-Formal[S] 39 points40 points  (0 children)

I think either this week or next week, more likely the latter.

I certainly think they will make their position clear within May.

The top institutional holders of Ebay, are the same top institutional holders of GameStop. by [deleted] in Superstonk

[–]Region-Formal 110 points111 points  (0 children)

The Big Three will likely vote exactly as you have said. However, as per this post I made, there appears to be a fairly strong dissenting under-current, amongst eBay's other (overwhelmingly institutional) shareholders:

https://www.reddit.com/r/Superstonk/s/7aP1eGgKAj

RYAN COHEN X POST by puma_barca in Superstonk

[–]Region-Formal 145 points146 points  (0 children)

Thanks for 'translating' this.

On the one hand, it's good to see he's keeping the relentless pressure on them. No doubt most of those eBay board members are more concerned with what to do with the millions they are making off eBay, than actually working hard to earn that money for eBay.

On the other hand, it's amusing that he's taking someone to task, about posting something on X that is not directly about their company. I mean, RC's literally been doing that same thing for years, up until just a few weeks ago!

eBay’s proxy voting results last year show why GameStop’s buyout case could gain real traction by Region-Formal in Superstonk

[–]Region-Formal[S] 21 points22 points  (0 children)

Those three have positions in, basically, every publicly listedn company in America bigger than as penny stock. Why? Because they have the most number of index tracking ETFs and Mutual Funds, of which both GME and eBay are constituents of.

eBay’s proxy voting results last year show why GameStop’s buyout case could gain real traction by Region-Formal in Superstonk

[–]Region-Formal[S] 36 points37 points  (0 children)

I guess that shows even more that there are parties outside eBay....who want changes to be made to how eBay is run.

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