Ryan Cohen Launches $55 Billion Bid for eBay

Ryan Cohen made a $55 billion bid for eBay, according to Semafor reported. The offer is structured as 50% cash and 50% stock, Cohen told CNBC. The crux of the bid is a highly confident letter signed by TD Bank.

Pioneered by Carl Icahn and Drexel Lambert in the 1980s, highly confident letters are formal, nonbinding letters used by investment banks or lenders to indicate they believe they can secure financing. Cohen’s financiers are at TD Bank, which does not have a lot of experience backing corporate takeovers.

The highly confident letter is closely held and even some of Cohen’s own advisers do not have access to it, according to people familiar with the situation.

EBay has seen the highly confident letter. The company believes the letter does not represent a workable financing package, according to people close to the company. Within the letter are a series of assumptions that caveat TD’s willingness or ability to raise the $20 billion in capital.

One assumption is that a combined eBay-GameStop would be able to attain an investment-grade rating if the deal goes through. eBay is currently rated on the cusp of investment-grade. Cohen’s bid would add $20 billion in debt to the company.

Moody’s said on Tuesday that a deal would be credit negative to eBay because of the substantial increase in financial leverage. Representatives for both GameStop and eBay declined to comment. Cohen took over GameStop in 2021.

When he assumed control, the company was saddled with debt and staring down collapse. Cohen managed to trim back the company’s debt profile dramatically and amass a massive cash pile, which is now arming his eBay bid. He seems unconcerned with the potential dilutive effect of his bid, as he told CNBC.