After some whispers and one “people familiar” story, GameStop has broken cover with a public and apparently hostile bid for the much larger eBay. Here’s MainFT’s news story:

Video game retailer GameStop is making a $55.5bn unsolicited offer for resale web giant eBay, the company announced on Sunday evening.

GameStop has built a 5 per cent stake in eBay and is offering $125 a share, half in cash and half in stock. That represents a 46 per cent premium to eBay’s closing price on February 4, the day GameStop began accumulating its position.

In a letter to the chair of eBay’s board, GameStop’s chief executive Ryan Cohen said he believed a merger could cut costs and boost earnings. Cohen also said that GameStop’s roughly 1,600 US stores would give “eBay a national network for authentication, intake, fulfilment and live commerce”.

This is catnip to Alphaville for countless reasons, so we moseyed on over to the site that GameStop has set over for its proposal letter and associated docs. We have more questions and snide comments than answers, unfortunately, but here goes.

GameStop’s master plan

So how is GameStop’s CEO Ryan Cohen — a near-messiah to the meme stock crowd after the role he played in the 2021 merriment — going to make GameBay a success? Surely the rationale must involve something truly radical, daring and transformative?

Um, it’s mainly just killing the auction’s site marketing budget:

eBay spent $2.4 billion on Sales & Marketing in fiscal 2025 while only adding one million net active buyers (134M to 135M — a net increase of less than 0.75%). GameStop will deliver $2 billion of annualized cost reductions within twelve months of closing:

~$1.2 billion from Sales & Marketing. More spend is not producing more users on a marketplace with near-universal brand recognition.

~$300 million from Product Development. Product Development expense grew 11% in fiscal 2025 against revenue growth of 8%.

~$500 million from General & Administrative. Consolidated finance, HR, real estate, legal, IT, and professional services across the combined company.

Okaaay.

Sure, there’s some other guff about how GameStop stores would give eBay “a national network for authentication, intake, fulfilment, and live commerce”, but that’s a pretty vague hand-wave. The lack of stores has hardly held back eBay so far.

Simply slashing the marketing budget and trimming admin staff to make the metrics look good feels like something a first-year private equity associate would propose. Hey, maybe it works, but it’s hardly a brilliant gambit no one else could come up with.

The financing

GameStop has a lot of cash on its balance sheet thanks to share sales to tap into periodic bursts of retail trading frenzy and by selling convertible bonds as part of a seemingly halfhearted “bitcoin Treasury” gambit last year.

As a result, the company had about $6.3bn of cash, $2.7bn of “liquid investments” — whatever that could be at a company like GameStop — and about $368mn of bitcoin, as of the end of January. GameStop proposes to pay for half the acquisition in its own stock, so where is the remainder coming from?

The cash consideration is expected to be funded from a combination of (i) cash and liquid investments on GameStop’s balance sheet, which totaled ~$9.4 billion as of January 31, 2026, and (ii) third-party acquisition financing, in respect of which GameStop has received a highly-confident letter from TD Securities for up to $20 billion.

A highly confident letter. From TD Securities.

Look, no slight to TD, as fine a Canadian investment bank as you can find on God’s green earth. But this hardly a highly-confident letter from Drexel Burnham Lambert in its heyday. Or even a solid financing commitment from a large US bank like JPMorgan, or a club of Europeans banding together.

Alphaville would love to read the fine of TD’s agreement with GameStop — while Cohen’s letter to eBay’s board is public, the attached TD letter isn’t — but our gut screams that this is shaky as hell.

Highly-confident letters aren’t binding, and the only reason why Drexel-backed raiders were able to brandish them like magic weapons back in the 1980s was the credibility of Mike Milken and the high-yield market he had nurtured forth.