In markets where it operates, GameStop is somewhat well-known as the place to go to for videogames, be they brand new or second-hand. The very same company has recently been in the news for wanting to acquire auction platform eBay, in a bid, no pun intended, to expand its brand to go beyond games and collectibles.
According to The Wall Street Journal, the move is part of GameStop CEO Ryan Cohen’s “audacious plan to turn the retailer into a US$100-billion (~RM395.6 billion) plus juggernaut”. That being said, the report also notes that between it and eBay, the latter is the much larger company. GameStop has a market value of around US$11 billion (~RM43.5 billion), while eBay is valued around US$45 billion (~RM178 billion) instead.
Despite this, GameStop has been “quietly building a stake” buying eBay shares. The report cites sources who claim that the former may submit an offer as soon as later this month. And if eBay rejects the offer, Cohen could decide to take the offer directly to eBay’s shareholders. That would be two signs of a hostile takeover, if the sources’ claims are accurate. Though no details of the potential offer were mentioned.
The size of the two companies and which one is doing the takeover aside, a merger between the two companies makes some degree of sense. As mentioned, GameStop is known in markets that it operates in for second hand videogames goods. On the other hand, eBay operates on a much larger scale, in that it’s available in more markets. And being an auction platform, it deals in just about anything second-hand.
That being said, goods aside, videogames themselves are moving more and more towards the digital market. For game publishers, this is a move that not only cuts out the middlemen (read: retailers, printers for discs and boxes), but also shrinks the second-hand market. Peripherals are largely unaffected, but it’s clear that retailers like GameStop are affected by the shift towards digital. It’s unclear if this attempt at acquiring eBay is a move to mitigate effects of said shift.
(Source: WSJ)
