This is a genuine question. Sorry if the answer is obvious. EBAY made $2B+ on profit last year. They're current trading at around 45-50B market cap. How does GME make them a legitimate offer? I know this sort of thing must be possible because the recent Paramount/WB deal immediately comes to mind. I don't know the specifics of that deal but I'd assume it's a somewhat similar situation, in that one company is trying to buy one that's significantly larger.
Where does GME get the money to make an offer that ebay shareholders would want to accept? Will someone lend them the money? Dilution?
Please explain
ELI5: How does GME, with $10B in assets and $4B debt, buy Ebay, a company trading at $50B?
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Posted by No_Cell6708
7 Comments
They get outside financing usually. Look for banks and investors that will loan the money. Look into the paramount warner brothers merger.
More debt.
The real question is why eBay would ever agree to such a deal.
a leveraged buyout of some sorts
i assume would have to be an all cash deal at a hugggggge premium, as i doubt ebay shareholders would agree to being paid in gme stock.
need someone to eli5 how this could be possible
When you buy a house, do you have all the money? No, you get a mortgage, you borrow
Usually the answer is stock, debt, or both. They don’t need $50B in cash sitting there today, they need a financing package shareholders think is credible. That can mean issuing a lot of new shares, borrowing against the combined business, bringing in partners, or making a mostly-stock offer, which is why ‘can they bid?’ and ‘is it a good deal?’ are very different questions.
Wait, GME *bought* eBay today? Wtf?
Pay for it by issuing a whole bunch of stock (5 shares of GME: 1 share of eBay). I remember Worldcom buying MCI in stock in the 1990s (MCI was much larger and a rival to the old AT&T)