Cyberx
- The retailer is reportedly changing course after its massive bid failed to win over investors or eBay.
- So, what would this partnership look like?
- A relationship with eBay could give GameStop a shortcut into a much larger online marketplace without taking on the enormous cost and debt that could come with buying the company outright.
The retailer is reportedly changing course after its massive bid failed to win over investors or eBay.
GameStop's big eBay gamble may already be changing shape. The company reportedly had its sights set on acquiring eBay in a massive deal worth around $56 billion. Still, after the proposal failed to generate much excitement, GameStop could now be looking at a much less dramatic option: teaming up instead of taking over.
GameStop CEO Ryan Cohen is considering pulling the reported takeover bid after it received a lukewarm response from Wall Street. The original plan was said to involve a leveraged buyout, meaning the combined company could have been left carrying billions of dollars in debt. That is a huge amount of baggage to bring along for a shopping trip.
eBay also reportedly showed little interest in the takeover idea, making it difficult for GameStop to move forward with the deal. Rather than continuing to push for a full acquisition, the company is now considering a partnership that could give both sides something they want without requiring GameStop actually to buy eBay.
So, what would this partnership look like?
According to the sources, GameStop could give eBay access to its roughly 1,600 U.S. stores. The two companies could then work together in the trading card and collectibles business, an area that has become increasingly important to GameStop. And there is a reason GameStop is paying so much attention to cards right now.
The collectibles market, particularly Pokémon cards, has exploded in popularity. GameStop has been putting more attention into this space as it looks for ways to make money beyond selling traditional video games. The partnership could give eBay a physical retail presence while giving GameStop a much stronger connection to eBay's massive online marketplace.
On paper, that sounds like a reasonable trade. But there is an obvious question: why would eBay want to give GameStop access to its business while also giving GameStop a seat at the table? That last part could be especially interesting. According to the sources, GameStop would reportedly want a seat on eBay's board of directors as part of the potential partnership.
For GameStop, the appeal is fairly easy to understand. The company has been trying to reinvent itself as the traditional video game retail business continues to change. Its online store already sells games, hardware, retro products and collectibles, but its e-commerce strategy has often seemed like it is still searching for a clear identity.
A relationship with eBay could give GameStop a shortcut into a much larger online marketplace without taking on the enormous cost and debt that could come with buying the company outright.
Still, the bigger question is what GameStop actually wants to be in the long run. The company is still called GameStop, but its growing focus on trading cards and collectibles has made it look increasingly different from the retailer many gamers grew up with. The collectibles business could become a major opportunity if the current demand continues.
But markets can be unpredictable, and today's hot trend can become tomorrow's headache pretty quickly. For now, GameStop is changing its approach rather than giving up on eBay entirely. The takeover may be losing steam, but the company could still be looking for a way to work with eBay—and if that partnership happens, it could completely change GameStop's next chapter.
