Disclaimer: I used AI for formatting and grammar purposes as English is not my main language.
TL;DR: The market is debating whether the eBay deal closes at $125, $135, or fails. I think we're asking the wrong question. The acquisition offer was never the real plan; it's the opening move in a proxy fight that follows the exact playbook Cohen used at GameStop in 2020-2022. The math works out dramatically better for existing GME shareholders if this read is correct.
The problem with the current debate
Most analysis I've seen falls into two camps:
- The bull case argues for a 60/40 equity split, $2B in synergies, and a path to $59+/share. It requires GME to trade at ~$40+ during the VWAP window to mathematically work. Right now GME is at $21.50.
- The bear case argues the deal is dilutive, the leverage is unsustainable, and existing shareholders get diluted from 100% of GameStop to ~27% of a debt-burdened combined entity.
Both readings assume the acquisition is real. What if it isn't?
The Cohen 2020-2022 playbook
Let's look at what Cohen actually did with GameStop:
- 2020: Accumulates 9.9% via RC Ventures
- November 2020: Publishes "Beyond Best Buy" letter publicly criticizing the board
- January 2021: Joins the board
- June 2021: Becomes Chairman
- June 2023: Becomes CEO, restructures everything
Timeline from stake to CEO: ~3 years. Cost: minimal beyond the initial stake purchase.
Now look at the eBay timeline:
- Q1 2026: Cohen begins accumulating via derivatives and direct shares
- April 2026: 5% economic stake disclosed
- May 3, 2026: Public letter to board, "non-binding proposal"
- May 4-9, 2026: Publicly attacks insiders ("$0 bought, $120M sold in 5 years"), calls them "hollow men," accuses culture of "day drinking"
- May 11, 2026: Files for 2.5B share authorization
- May 12, 2026: Board rejects publicly
This is the same playbook. First six months are nearly identical.
Why the offer was structured to be rejected
Several details only make sense if the offer was a tactical device, not a serious acquisition attempt:
1. Non-binding proposal with no prior board contact. Per eBay's response, GameStop never reached out before going public. A real acquirer wanting to close a deal contacts the board privately first. Cohen wanted the public rejection.
2. Highly Confident Letter conditioned on investment-grade rating. The TD letter eBay published revealed the financing requires the combined entity to maintain investment-grade credit from at least two of the top three agencies. Moody's has already flagged that the combined entity would be junk-rated. The financing was effectively unavailable from day one. Cohen obviously knew this.
3. Insufficient authorized shares. GameStop has ~321M authorized shares available after existing issuances and Cohen's option package. The deal needs ~1.2B new shares at current prices. The 2.5B authorization request was filed AFTER the offer, not before. A real acquirer ensures the authorization is in place before announcing.
4. The "I want to be CEO of eBay" framing. Cohen explicitly told Business Insider: "I want to be CEO of eBay." He wants it to be his baby (in his own words). That's the language of someone planning to run the company, not someone planning to buy and integrate it.
5. The communication strategy targets users, not investors. Cohen has done interviews with Justin Resells (an eBay seller YouTuber with ~150k subs), TBPN (a tech podcast), and Charles Payne (retail Fox). He's been deliberately combative with CNBC (institutional audience). If he wanted to close a deal, he'd be doing institutional roadshows, not selling his socks on eBay for $14k.
He's mobilizing the eBay user base. That's what you do for a proxy fight, not an acquisition.
The cheap way to take over a company
A $55B acquisition requires:
- $9B cash deployed
- $20B+ in debt (junk-rated)
- 1.2B+ new shares issued
- 73% effective dilution for existing GME shareholders
- 18-24 months of integration risk
A proxy fight requires:
- $50-200M in legal and advisory fees
- 12-18 months of campaign work
- Mobilization of eBay shareholders and proxy advisors
- A credible slate of director nominees
Same end result: Cohen controls eBay. Vastly different cost structure for existing GME shareholders.
The proxy path is also massively better for Cohen personally. His $35B compensation package vests on GameStop market cap milestones. A diluted, debt-burdened GameStop hits those milestones with greater difficulty than a leaner GameStop that takes control of eBay through governance rather than acquisition.
The math comparison
Acquisition scenario at current $21.50:
- Total post-deal shares: ~1.66B
- Existing GME shareholders: 27%
- Equity value range (assuming successful execution): $40-65B
- Implied share price: $24-39
Proxy fight scenario:
- GameStop share count stays roughly unchanged
- 5% eBay stake appreciates as Cohen gains control (potential $1B+ unrealized gain)
- GameStop standalone continues generating ~$500M/year in interest income alone
- Combined value through governance synergies and strategic optionality
- Potential implied share price on successful proxy path: $40-60+ over 3-5 years
The proxy path is mathematically superior for existing shareholders. Cohen would know this.
What to watch for
If the proxy thesis is right, we should see:
- Continued accumulation of eBay shares (watch for 13D amendments showing GameStop crossing 6%, 7%, 8%+)
- No improved offer at $135-145
- Hiring of specialized proxy fight counsel (Wachtell, Sullivan & Cromwell, Cleary)
- Recruitment of director candidates (typically late 2026)
- Continued public attacks on eBay management without corresponding M&A escalation
- Mobilization campaigns targeting eBay shareholders directly
If the acquisition thesis is right (and the proxy thesis is wrong), we should see:
- Improved offer terms ($135+ per share, more cash component)
- Private engagement with eBay board
- Definitive financing commitments replacing the HCL
- Pivot to a more accommodating target if eBay won't engage
The implications for existing GME shareholders
If this read is correct, the current price action (GME drifting from $26 to $21.50 as the market "loses faith" in the deal) is a buying opportunity rather than a warning sign. The market is pricing the acquisition path failing. It's not pricing the proxy path succeeding.
Cohen's June 8 AGM and June 10 earnings will be the next data points. The 2.5B share authorization isn't necessarily for an acquisition. It could be for additional eBay share purchases, future strategic flexibility, or both. The Q1 earnings are likely strong (gross margin expansion, interest income on $9B cash, Bitcoin position recovery). Both events could reset the narrative.
I'm not certain this is what's happening. The acquisition thesis is still plausible at 30-40% probability. But the proxy fight thesis explains more of the observed behavior than the acquisition thesis does, and it's significantly more favorable to existing shareholders if correct.
The compensation package question
A reasonable objection: Cohen's $35B comp package vests on GameStop market cap milestones ($20B to $100B) and cumulative EBITDA milestones ($2B to $10B). A pure proxy fight without an eventual merger seems inconsistent with this structure. How does GameStop standalone reach $100B market cap?
Two possible answers reconcile this tension.
The proxy fight as prelude to merger: Cohen takes board control of eBay through proxy in 2027, restructures management, then proposes a merger in 2028-2029 from a position of negotiating strength. The merger eventually happens (but at terms Cohen negotiates from inside both boardrooms, not as a hostile acquirer paying premium with massive dilution). Existing GameStop shareholders avoid catastrophic current-price dilution. The package eventually vests as the combined entity scales.
The lower-variance path: Cohen's existing ~9% GameStop stake is worth ~$900M today. The package is leverage on top of that, not the primary incentive. If he can avoid massive dilution and grow GameStop's standalone value through organic operations, strategic accumulation (eBay stake, Bitcoin, future targets), and re-rating, his personal stake plus partial package vesting may economically exceed a high-risk full-acquisition path.
The contract also contains an anti-dilution clause that adjusts milestones higher when stock is used as consideration for acquisitions. This means Cohen can't simply dilute his way to milestones (he needs to create real value). The clause works for the proxy thesis: it makes a delayed, well-structured merger more attractive than a rushed current-price acquisition.
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Hat tip to u/Over-Computer-6464 whose comments across multiple threads articulated this read most clearly. Worth following.
Not financial advice. I hold shares.
