| ▲ | hdgvhicv 4 hours ago |
| Wouldn’t that debt knock down the market cap as much as the value Otherwise take out a $20b loan and put it in the bank. Assets increase $20b, job done. |
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| ▲ | sspiff 3 hours ago | parent | next [-] |
| There is precedent for this kind of trickery being played. For example, Honeywell acquired Garrett AiResearch, a well known manufacturer of turbochargers for combustion engines, through a series of mergers. Later on, it loaded them up with debt (over $1.5 billion, mostly asbestos related indemnity obligations from other parts of the business), before spinning them out as an independent entity again. Two years later, Garrett filed for bankruptcy claiming it was succumbing to the unsustainable debt burden placed upon it by its former owner. |
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| ▲ | stevefan1999 2 hours ago | parent | next [-] | | So you mean...marrying someone but transfer all the personal debt to the others, then divorcing so that I have no responsibility whatsoever? Not even an obligation to settle for the debt just like disappeared through an expired relationship? | | | |
| ▲ | dpoloncsak an hour ago | parent | prev | next [-] | | I believe this is what they call the 'Texas Two-Step' | | | |
| ▲ | renticulous 2 hours ago | parent | prev [-] | | Perplexity wants to buy Google Chrome vibes. |
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| ▲ | graemep an hour ago | parent | prev | next [-] |
| They are paying half in GameStock equity. They will issue new shares so they will buy Ebay of $55bn, but add only $20bn debt. Its good for GameStock management who will end up running a much bigger business. https://investor.gamestop.com/news-releases/news-details/202... Game Stock management is essentially claiming that they can run Ebay better than the current management so Ebay shareholders will end up better off by selling to Game Stock: they get some cash and shares in a business that will be mostly a better run Ebay. Very possible bad for GameStock shareholders who will end up with a smaller stake in a bigger business. |
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| ▲ | eloisant an hour ago | parent [-] | | It that's bad for GameStock shareholders, surely they'll vote against it? |
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| ▲ | lesuorac 4 hours ago | parent | prev | next [-] |
| Well, his argument is that he can remove inefficiencies in the combined company. GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt. |
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| ▲ | wongarsu 4 hours ago | parent | next [-] | | He can argue that. But to me it seems more likely that culture and market demands are so different between the two companies that sharing any substantial resources would be to the detriment of at least one of the two halves. And more likely detrimental to both The most beneficial thing is how even proposing this shifts peoples' perception of Gamestop from a beloved but struggling brick and mortar chain to a successful business | | |
| ▲ | sandworm101 an hour ago | parent | next [-] | | > to a successful business Maybe from a brick-and-mortor store to yet another private equity fund whose continued existance comes solely from debt and merger trickery. | |
| ▲ | cyanydeez 3 hours ago | parent | prev [-] | | the only benefit I can see is some kind of eBay pick up and verification scheme where sellers use the gamestop locations to send their products and buyers go theere to pick it up. That would basically create a "this is garbage feedback" that could cleanup some of ebay's long standing problems in trust. | | |
| ▲ | mapt 3 hours ago | parent [-] | | While this seems like the perfect synergy with a company that has too many branches and not enough business, those branches are also tiny. I'd bet employees are not enthusiastic about becoming UPS. Becoming Radio Shack / Microcenter, as far as 3D Printing and DIY electronics, seems like it intersects with their target audience more, but they're also probably pretty short on space for that. | | |
| ▲ | cyanydeez 3 hours ago | parent [-] | | yeah, their shops arnt sized to do much more than UPS style package movement. I dont see it as a good value, but it's the only thing I see as a synergy. Otherwise it's just more garbage capitalism. | | |
| ▲ | alchemist1e9 3 hours ago | parent [-] | | > garbage capitalism. How is this defined? | | |
| ▲ | rchaud 2 hours ago | parent | next [-] | | A few things come to mind: - SPAC IPOs that dodge standard disclosure requirements and worsen information asymmetry. See WeWork. - Board positions filled with CEO loyalists instead of independent directors. See OpenAI firing Altman before Microsoft reinstated him. - Management taking seemingly arbitrary decisions that turn out to be directly linked to their own compensation. SpaceX ordering a bunch of Teslas, or merging with a distressed asset (xAI). See above point on loyalist boards. - The very concept of leveraged buyouts where financiers borrow money to buy a company, then put the burden on repayment on the company AND pay themselves hefty management fees. This inevitably leads to layoffs and a rapid decline in product/service quality while the company is scrapped for parts. | |
| ▲ | jfengel 3 hours ago | parent | prev | next [-] | | Moving money around and pretending that there is more of it. | | |
| ▲ | alchemist1e9 2 hours ago | parent [-] | | You mean leverage/borrowing? Pretty time tested mechanism of risk taking in free markets. | | |
| ▲ | idiotsecant 2 hours ago | parent [-] | | Moving money from one pile to another so that you can skim a little off the top is imaginary work and is slowly destroying the west |
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| ▲ | smallmancontrov 2 hours ago | parent | prev | next [-] | | Slumlord owners of the network effect monopolies innovating ever lower investment in innovation and upkeep with ever higher increases in rent extraction, with a few nipple tassles slapped on the side to entice retail investor hype cycles. | |
| ▲ | 2 hours ago | parent | prev [-] | | [deleted] |
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| ▲ | OtherShrezzing 3 hours ago | parent | prev | next [-] | | >GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt. GameStop had revenues of $3bn last year and eBay was $10-12bn, so combined it's $13-15bn. A net income increase of 1.2bn on that gross is a tall order for M&A efficiencies. Especially difficult when the two companies have essentially zero operational crossover, besides business admin. It doesn't seem likely to me that merging eBay's accounting/legal departments into GME's (and similar efficiency gains) is going to save anything close to a billion across the two entities. | | |
| ▲ | 59percentmore 3 hours ago | parent [-] | | I don't think this is a serious assessment. For years, the core business of both companies has been facilitating the flow of used goods. Gamestop has moved strongly into collectibles recently, with a partnership with collectible grading firm PSA and the introduction of (essentially) lucrative trading card lootboxes, whereas eBay has capitalized on the same expansion of the collectibles market with new live/flash auction features. IIRC, Gamestop recently had a "trade-in anything" day, where they accepted a variety of products for store credit. Seems an awful lot like this was some sort of test for accepting products in-store for eBay listings, or something along those lines. They already accept trading cards to send off to PSA for grading and to place into their lootbox system. As far as efficiencies go, you can see things like shifting shipping by individual sellers to mass shipping to/from a warehouse, a much heavier footprint in collectibles, and perhaps quality control that reduces buyer disputes (this one's a bit iffy). | | |
| ▲ | DSMan195276 an hour ago | parent | next [-] | | Well let's be clear, the "trade-in anything" day was a fancy discount day. They gave everybody $5 for whatever they brought in, online you can read from employees that they just donated or threw it all away, no attempt to actually keep any of it to sell. That said IMO the biggest difference in the two situations you're describing is that EBay is not in the business of buying the items to then sell later, they just facilitate transactions between two parties and some of the logistics (depending on the seller). They're similar as far as dealing with "used goods" but the actual design of the business and risk being taken on is very different. EBay also not really lacking what you're describing - there are fufillment centers that can be used for EBay listings, there's the EBay "Authenticity Guarantee" program for cards, they already own TCGplayer which does all of this for trading cards way better than GameStop does, etc. Perhaps somehow these things could be improved by GameStop but I can't imagine it being significantly better than it currently is. | |
| ▲ | idiotsecant 2 hours ago | parent | prev [-] | | They are wildly different businesses. Ebay is not in the business of holding physical goods, they are a marketplace that connects buys, sellers, and shippers and adjudicates fraud, collects funds, handles taxes, etc. They are not a warehouse. Gatestop is a retail operation that buys and sells goods. It takes on all the liability for fake products, it puts capital on the line to purchase used goods, it is a totally different (and worse) business | | |
| ▲ | busterarm an hour ago | parent [-] | | That’s not correct. eBay owns TCGplayer which has large warehouses and does direct shipping & fulfilment sales (tcgdirect). |
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| ▲ | repelsteeltje 4 hours ago | parent | prev | next [-] | | > Well, his argument is that he can remove inefficiencies in the combined company. Sigh. The synergy argument, once again. While historically most mergers don't work out particularly well, I'm absolutely sure this time will be different. | | |
| ▲ | falcor84 3 hours ago | parent [-] | | "How do you make money? Spinoffs, split-ups, liquidations, mergers and acquisitions." - Mario Gabelli Just sample from these with replacement sufficiently many times and you're all set. At the very least, you'll owe people so much money that they'll have a massive interest in helping you. |
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| ▲ | Forgeties79 2 hours ago | parent | prev [-] | | That is a massive “if” |
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| ▲ | ineedasername 2 hours ago | parent | prev | next [-] |
| Depends on how market cap is defined for the purpose of the contract. Typical definition is just against floating shares in the market * share price. Debt doesn’t factor in at all except in so far as it will influence investor confidence -> share price. That said: conceptually it’s not an awful fit for GameStop. In so far as video games discs and cartridges were the main disposable belonging i had as a kid and the main target for new purchases, Funcoland was (later to become GameStop), if you squint your eyes, a brick & mortar eBay scoped to only video games. If you’d been an SV startup at the time pitching the eBay concept you could have said “it’s like funcoland, but online and for anything and also lets people sell peer to peer “ |
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| ▲ | an hour ago | parent | prev [-] |
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