'The details are on our website'

GameStop (GME) has offered $56 billion in cash and stock to buy (EBAY). But an interview with CEO Ryan Cohen on the math surrounding the deal raised more questions than answers.

GameStop is roughly a fourth the size of eBay, with roughly $9 billion of cash on its balance sheet. The company said it has a “highly-confident letter” from TD Bank for $20 billion in debt financing. Meanwhile, eBay’s valuation is $46 billion.

Cohen appeared annoyed with CNBC hosts when pressed on how the company would raise the necessary funds to purchase eBay, a legacy online marketplace.

“It’s half cash, half stock, but the details are on our website,” Cohen said.

When asked again about how the math for the deal could work, Cohen replied, “I don’t understand your question. We’re offering half cash, half stock, and we have the ability to issue stock in order to get the deal done.”

GameStop stock declined more than 10% Monday as investors concluded that the proposed deal could require significant share issuances and dilute existing shareholders.

GameStop’s offer represents a 20% premium to Friday’s close. Shares of eBay jumped 8% on Monday.

As for his vision of the type of combined company Cohen is envisioning, he said, “There’s going to be some leverage on the balance sheet in order to make an acquisition possible, but it’s also going to be making a lot more money in the future than it is today because it is going to run a lot more efficiently.”

Cohen said he has not had conversations with eBay, suggesting a hostile takeover attempt was likely.

In a statement, eBay said it had no discussions with or outreach from GameStop prior to receiving the proposal.

“The Board will review this proposal with a focus on the value to be delivered to eBay shareholders, including the value of the GameStop stock consideration and the ability of GameStop to deliver a binding, actionable proposal,” said the statement.

GameStop has already built a roughly 5% stake in eBay.

The company has made a series of moves to reinvent itself over the years since Cohen took the helm of the struggling video game retailer. Cohen was appointed CEO of GameStop in September 2023 after serving as executive chair since 2021.

The stock has seen renewed periods of meme frenzy since it became the poster child of retail investors more than five years ago. Year to date, GameStop stock is up more than 23%, but it’s down roughly 9% over the past 12 months. The stock has lagged more than 38% over the past five years.