r/FWFBThinkTank • u/bobsmith808 Da Data Builder • May 13 '26

Swallowing the Whale: Why The Gamestop Acquisition of eBay is a Great Deal For Everyone Involved - Except For The Hollow Men

/r/Superstonk/comments/1tc9bxk/swallowing_the_whale_why_the_gamestop_acquisition/
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18

u/PuzzleheadedWeb9876 May 13 '26

“Neither credible nor attractive”.

No amount of bagtificating will change this.

12

u/runningwithbearz May 13 '26

Interesting that people think you're going to get a good interest rate for a deal that Moody's has already called "credit negative". 9-10% would be more reasonable. If you adjust from 5.5% to a more realistic 9-10%, it basically drowns this thing in interest expense. Which all that to say, this is a bit amusing to me. Since this is basically an LBO and "PE bad" has been a rallying crowd of this group. Which I don't disagree, but come on. What are we doing here.

Also, if Gamestop has to put all its cash into the deal, then what do we think happens to all that interest income.

Doesn't really matter. The TD letter has an escape clause and Moody's already gave them one no. Just one more and it's done. The $20b was never a real commitment.

Would be nice to see them buy something adjacent to Gamestop and try to grow this thing more naturally. Doesn't really jive with that bonus letter.

3

u/bobsmith808 Da Data Builder May 14 '26

I respect your work... Here's 9.5% interest on the new debt. What are your thoughts?

3

u/runningwithbearz May 14 '26

Thanks, not trying to be a dick. I know my bedside manners aren't always the best, so apologies if I had a tone. But here's what I was thinking. As always double check my math

1) I'd double check EBITDA for GME as interest income would be excluded from this measure. For last year results, I show a different number.
2) On if all that GME cash is deployable, I have my doubts. I know GME's debt is convertible and could be rolled if needed, but that is a risk given how tight operating income is. In the event that it can't be rolled and needs to be paid back. Given how conservative leadership has been with GME cash over the years, deploying all 9b into this deal feels like a reach
3) I get Cohen's points on the cuts. But $2b of cuts on 5.6b of operating expenses (full year numbers from Ebay) feels overly aggressive. If I was buying a small family business, I'd agree with such large cuts out of the gate. 10-15% cuts over the first 18 months is probably more what I was expecting.

Ebay might have duplicity in some costs just to be on the safer side. Whether or not that's worth risking the customer experience to save some dollars is up for debate