GameStop Shareholders Greenlight Share Issuance to Fund Potential eBay Acquisition

Deep News07-08 08:03

GameStop Corp. announced on Tuesday that its shareholders have approved all proposals at the annual meeting, including a measure to allow the video game retailer to issue additional shares, a move intended to support a potential acquisition of the auction platform eBay.

This announcement represents the latest development in the ongoing saga surrounding the company's attempt to acquire the larger eBay. Analysts widely view the takeover bid as fundamentally challenging to justify from both a financial and strategic business perspective.

The company stated that the proposal to increase the number of authorized common shares to 2.5 billion, which would be enacted by amending its corporate charter, received support from 68.7% of votes cast. The company said this amendment would provide it with the "ability to issue common stock in strategic transactions, including its proposed acquisition of eBay."

Shares of GameStop closed down 2.5% on Tuesday but saw a slight increase in after-hours trading. Year-to-date, the stock is up 10.6%. The current price of around $22 remains significantly below the peak levels reached during the 2021 meme-stock frenzy.

Shares of eBay experienced a modest rise in after-hours trading. eBay currently holds a market capitalization of approximately $50 billion, while GameStop's market cap is around $10 billion.

GameStop issued an acquisition proposal for eBay valued at $56 billion in May of this year. Although eBay rejected the offer, GameStop has continued to increase its stake in the online marketplace.

The company's overall sales performance has been volatile, impacted by the shift towards digital gaming. Last month, the company announced that its board had approved a $2 billion stock repurchase program. It also revealed that its collectibles business drove a 14% year-over-year increase in total sales for the first quarter.

Last month, GameStop disclosed that CEO Ryan Cohen had requested the removal of a potentially highly lucrative CEO performance award package from the shareholder proxy statement.

Cohen stated at the time that he "wanted management to be 100% focused on the operational performance of GameStop and the proposed eBay transaction."

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