Tbh, if you can convince someone to take your relatively worthless pieces of paper in exchange for your valuable asset, then your worthless pieces of paper are no longer worthless.
Not much different than me having a bit of cash and putting 5% or 20% down to buy a home or car: now I’m a big asset and debt holder and you got some pieces of paper with dead presidents on it.
That was the hard part of the deal: will (enough) eBay shareholders want to be GameStop shareholders.
eBay shareholders would be right to be upset with eBay management. eBay has treaded water in a niche of online shopping while online shopping has grown massively. Whether GameStop is their solution or not, Iunno.
> That was the hard part of the deal: will (enough) eBay shareholders want to be GameStop shareholders.
There is no upside for eBay shareholders - a leveraged buyout makes sense if it's for 100% cash, because the buyers are taking the risk and the debt, and the sellers get the cash. But in this deal, Gamestop need to borrow the money to pay 50% to eBay's shareholders, but then the other 50% eBay's shareholders get is shares in the company that holds all that debt!?!
It would be better for eBay's investors if eBay themselves just borrowed $20bn to do share buybacks. I mean, it would still be dumb and make absolutely no financial sense (because they still hold shares in the company that holds the debt) but at least they wouldn't have the extra liability of Gamestop's dwindling business on the side.
Not much different than me having a bit of cash and putting 5% or 20% down to buy a home or car: now I’m a big asset and debt holder and you got some pieces of paper with dead presidents on it.
That was the hard part of the deal: will (enough) eBay shareholders want to be GameStop shareholders.
eBay shareholders would be right to be upset with eBay management. eBay has treaded water in a niche of online shopping while online shopping has grown massively. Whether GameStop is their solution or not, Iunno.