D Securities for up to $20 billion in debt financing, if the combined company can secure investment-grade credit ratings. Industry analysts have questioned whether that will be possible. Cohen raised more questions on Wall Street with vague answers in recent interviews to questions about how he would pay for Ebay, a company nearly five times the size of his own. Despite the resounding refusal from Ebay’s board, bankers, investors, lawyers and industry analysts say Cohen has an unlikely, but not impossible, path for wresting control of Ebay. Tender offer One option for Cohen, who co-founded online pet goods retailer Chewy and is credited with turning around GameStop in 2021, would be to bypass Ebay’s board by approaching shareholders with an offer to buy them out at a premium through a so-called tender offer, more than half a dozen bankers, lawyers and analysts said. While tender offers are relatively rare, they can make a lot of noise. Paramount Skydance used one that promised all cash to pressure Warner Bros Discovery into negotiations, despite its existing agreement to sell to Netflix. Paramount ultimately won after being rejected at least a half dozen times. GameStop would have to convince Ebay’s largest institutional investors including Vanguard, BlackRock and State Street, which run the world’s biggest index funds. Together the three own more than 22 per cent of Ebay, holding the stock automatically as a part of the index they track. Analysts say it is highly unlikely these firms would jump to approve a hostile takeover bid. “There is zero chance that a tender offer works,” said Don Bilson, head of event-driven research at Gordon Haskett, adding, “no Ebay shareholder would opt into this.” Shares of Ebay have jumped 32 per cent so far this year, giving the company a market value of roughly $51 billion. It reported strong first-quarter earnings, citing high-growth markets like collectors of memorabilia, toys and other items. Since Jamie Iannone took over as CEO in 2020, after activist investors forced out his predecessor, Ebay’s stock has climbed by about 200 per cent. GameStop shares are up by more than 11 per cent so far this year. But since Cohen took over as chairman in June 2021, the share price has fallen by about 70 per cent, after accounting for stock splits. Representatives for GameStop and Ebay declined to comment. Special meeting Cohen, who has told his advisers he may want to go directly to shareholders, could also call a special meeting to elect new directors who may be more sympathetic to his offer. To do that, he would need to buy more shares. GameStop recently said it now has 6.6 per cent in “economic exposure” to Ebay, up from roughly 5 per cent, but not all of that conveys voting rights. Most of GameStop’s economic interest in Ebay stems from put/call pair derivative positions tied to 29 million shares of stock that would only carry voting rights if the contracts are physically settled. GameStop owns just 25,000 shares of Ebay outright, roughly 0.006 per cent of the company. Even if those derivatives are eventually converted into voting shares, GameStop ownership falls far short of the traditionally required 20 per cent stake in common stock to call a special meeting. GameStop appealed to its own investors on Friday to authorize the issuance of more stock from 1 billion to 2.5 billion shares, increasing speculation that Cohen plans to issue stock to buy more Ebay shares. “We view our equity as precious and do not intend to issue new shares lightly. A reserve of authorized shares ensures GameStop can act decisively when the right opportunity arises,” the company said in a letter to shareholders. Mark Cohen, former director of retail studies at Columbia Business School and the former CEO of Sears Canada and no relation to the GameStop CEO, was skeptical the plan would work. “If he had the capacity to mount a proxy fight he might get away with it, but he doesn’t. So the Ebay board blew this off,” said Mark Cohen. “He’s got enough money to make the claim but not enough money to make his claim stick.” Public pressure Ryan Cohen’s best option, analysts and investors said, may be to exert public pressure on the board to wear directors down. He is already doing that, saying Ebay “needs to be on Ozempic – it’s literally obese” in a public interview with investor Anthony Pompliano and telling journalist Piers Morgan the company is “run by a bunch of losers.” Analysts take issue with that characterization, saying Ebay generated an enviable operating profit margin of 31 per cent in the last fiscal year – three times as high as GameStop’s 10 per cent. Cohen famously helped save GameStop from possible bankruptcy in 2021 as hedge funds bet the ailing video game retailer’s stock and market valuation, teetering around $250 million, would continue to fall. He later took heat for launching a campaign as an activist investor in 2022 against Bed Bath & Beyond. The retailer’s stock price collapsed after he sold his shares for a $60 million profit. The company was forced to issue more shares until it finally filed for bankruptcy in 2023. So far, his bet on GameStop has paid off better for other investors. It now has a market value of $11 billion after Cohen, who joined the board in 2021 and became CEO in 2023, cut costs, pivoted the focus away from video games and toward trading cards, and made big share offerings that delighted legions of retail investors who supported him during the face-off with the hedge funds. “I’m an owner-operator,” Cohen told Morgan, trying to lay out differences between him and Ebay CEO Jamie Iannone, suggesting he has more skin in the game. While Wall Street awaits Cohen’s next move, several bankers and lawyers noted that an unwelcome bid is a slow process and Cohen is not tied to any time constraints to move quickly. One of his options would be “to just sit there and wait,” Gordon Haskett’s Bilson said. “There is no rush.” Reporting by Svea Herbst-Bayliss and Abigail Summerville in New York. Editing by Dawn Kopecki and David Gregorio. All courtesy of Reuters. Further reading: Investors skeptical about GameStop’s audacious $56bn bid for Ebay