GameStop eBay bid faces financing questions
GameStop eBay deal faces financing scrutiny as credit risks cloud the $56B bid TD support, Moody’s concerns and dilution fears make the takeover worth watching
GameStop’s proposed $56 billion offer for eBay is drawing scrutiny over how the deal would be financed. CNBC reported that the company says it has a $20 billion financing commitment from TD Securities, but the arrangement appears to depend on the combined company keeping an investmentgrade credit profile.
That condition has become a central concern because Moody’s said the takeover would be credit negative for eBay. The ratings firm estimated that leverage for the merged company could rise to nearly nine times debt to EBITDA before any cost savings, which could put the business below investment grade.
The offer also raises broader questions about whether GameStop can support a transaction of this size, given its roughly $11 billion market value. CEO Ryan Cohen has said the company could issue additional stock to help complete the deal, while eBay said it received the unsolicited proposal and will review it.