39 ms·

Well, his argument is that he can remove inefficiencies in the combined company. GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total

Well, his argument is that he can remove inefficiencies in the combined company. GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt.

repelsteeltje 6mo ago
> Well, his argument is that he can remove inefficiencies in the combined company. Sigh. The synergy argument, once again. While historically most mergers don't work out particularly well, I'm absolutely sure this time will be different.
- falcor84 6mo ago
  "How do you make money? Spinoffs, split-ups, liquidations, mergers and acquisitions." - Mario Gabelli Just sample from these with replacement sufficiently many times and you're all set. At the very least, you'll owe people so much money that they'll have a massive interest in helping you.
- jamesfinlayson 6mo ago
  I've been told that Australian company Wesfarmers fanatically avoids synergies when acquiring companies so that if the time comes to cast it off, there's no painful separation of a bunch of shared systems/departments/real estate etc.
  - repelsteeltje 6mo ago
    Not saying synergy is a dirty word, always. It's the assumption that there is a lot of overlap (which rarely materializes) and that assimilation or merging has no cost. In practice, company cultures are rarely aligned (the merger wasn't conjured by employees, they weren't even consulted) and frustrated talent leaves. Time is lost navel gazing. Synergy (i.e.: cost reduction) looks great in Q3 balance sheet, but in the mean time intrinsic company value has decreased. The long term prospect isn't so great.
    - jamesfinlayson 6mo ago
      Oh agreed - I was at a company that was the result of two companies merging and while the reduced head count was an easy synergy (don't need two legal, HR, cyber-security etc teams), everything else was pretty slow.
wongarsu 6mo ago
He can argue that. But to me it seems more likely that culture and market demands are so different between the two companies that sharing any substantial resources would be to the detriment of at least one of the two halves. And more likely detrimental to both The most beneficial thing is how even proposing this shifts peoples' perception of Gamestop from a beloved but struggling brick and mortar chain to a successful business
- cyanydeez 6mo ago
  the only benefit I can see is some kind of eBay pick up and verification scheme where sellers use the gamestop locations to send their products and buyers go theere to pick it up. That would basically create a "this is garbage feedback" that could cleanup some of ebay's long standing problems in trust.
  - mapt 6mo ago
    While this seems like the perfect synergy with a company that has too many branches and not enough business, those branches are also tiny. I'd bet employees are not enthusiastic about becoming UPS. Becoming Radio Shack / Microcenter, as far as 3D Printing and DIY electronics, seems like it intersects with their target audience more, but they're also probably pretty short on space for that.
    - cyanydeez 6mo ago
      yeah, their shops arnt sized to do much more than UPS style package movement. I dont see it as a good value, but it's the only thing I see as a synergy. Otherwise it's just more garbage capitalism.
      - alchemist1e9 6mo ago
        > garbage capitalism. How is this defined?
        6mo ago
OtherShrezzing 6mo ago
>GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt. GameStop had revenues of $3bn last year and eBay was $10-12bn, so combined it's $13-15bn. A net income increase of 1.2bn on that gross is a tall order for M&A efficiencies. Especially difficult when the two companies have essentially zero operational crossover, besides business admin. It doesn't seem likely to me that merging eBay's accounting/legal departments into GME's (and similar efficiency gains) is going to save anything close to a billion across the two entities.
- 59percentmore 6mo ago
  I don't think this is a serious assessment. For years, the core business of both companies has been facilitating the flow of used goods. Gamestop has moved strongly into collectibles recently, with a partnership with collectible grading firm PSA and the introduction of (essentially) lucrative trading card lootboxes, whereas eBay has capitalized on the same expansion of the collectibles market with new live/flash auction features. IIRC, Gamestop recently had a "trade-in anything" day, where they accepted a variety of products for store credit. Seems an awful lot like this was some sort of test for accepting products in-store for eBay listings, or something along those lines. They already accept trading cards to send off to PSA for grading and to place into their lootbox system. As far as efficiencies go, you can see things like shifting shipping by individual sellers to mass shipping to/from a warehouse, a much heavier footprint in collectibles, and perhaps quality control that reduces buyer disputes (this one's a bit iffy).
  - idiotsecant 6mo ago
    They are wildly different businesses. Ebay is not in the business of holding physical goods, they are a marketplace that connects buys, sellers, and shippers and adjudicates fraud, collects funds, handles taxes, etc. They are not a warehouse. Gatestop is a retail operation that buys and sells goods. It takes on all the liability for fake products, it puts capital on the line to purchase used goods, it is a totally different (and worse) business
Forgeties79 6mo ago
That is a massive “if”
SwellJoe 6mo ago
Which is a laughable argument.

repelsteeltje 6mo ago

> Well, his argument is that he can remove inefficiencies in the combined company. Sigh. The synergy argument, once again. While historically most mergers don't work out particularly well, I'm absolutely sure this time will be different.

falcor84 6mo ago
"How do you make money? Spinoffs, split-ups, liquidations, mergers and acquisitions." - Mario Gabelli Just sample from these with replacement sufficiently many times and you're all set. At the very least, you'll owe people so much money that they'll have a massive interest in helping you.
jamesfinlayson 6mo ago
I've been told that Australian company Wesfarmers fanatically avoids synergies when acquiring companies so that if the time comes to cast it off, there's no painful separation of a bunch of shared systems/departments/real estate etc.
- repelsteeltje 6mo ago
  Not saying synergy is a dirty word, always. It's the assumption that there is a lot of overlap (which rarely materializes) and that assimilation or merging has no cost. In practice, company cultures are rarely aligned (the merger wasn't conjured by employees, they weren't even consulted) and frustrated talent leaves. Time is lost navel gazing. Synergy (i.e.: cost reduction) looks great in Q3 balance sheet, but in the mean time intrinsic company value has decreased. The long term prospect isn't so great.
  - jamesfinlayson 6mo ago
    Oh agreed - I was at a company that was the result of two companies merging and while the reduced head count was an easy synergy (don't need two legal, HR, cyber-security etc teams), everything else was pretty slow.

wongarsu 6mo ago

He can argue that. But to me it seems more likely that culture and market demands are so different between the two companies that sharing any substantial resources would be to the detriment of at least one of the two halves. And more likely detrimental to both The most beneficial thing is how even proposing this shifts peoples' perception of Gamestop from a beloved but struggling brick and mortar chain to a successful business

cyanydeez 6mo ago
the only benefit I can see is some kind of eBay pick up and verification scheme where sellers use the gamestop locations to send their products and buyers go theere to pick it up. That would basically create a "this is garbage feedback" that could cleanup some of ebay's long standing problems in trust.
- mapt 6mo ago
  While this seems like the perfect synergy with a company that has too many branches and not enough business, those branches are also tiny. I'd bet employees are not enthusiastic about becoming UPS. Becoming Radio Shack / Microcenter, as far as 3D Printing and DIY electronics, seems like it intersects with their target audience more, but they're also probably pretty short on space for that.
  - cyanydeez 6mo ago
    yeah, their shops arnt sized to do much more than UPS style package movement. I dont see it as a good value, but it's the only thing I see as a synergy. Otherwise it's just more garbage capitalism.
    - alchemist1e9 6mo ago
      > garbage capitalism. How is this defined?
      - 6mo ago

OtherShrezzing 6mo ago

>GME is ~12B, EBAY is ~46B (58 total) with net income of 0.4B and 2B (2.4 total). If he boosts profit by 1.2B then it's nearly a 50% increase and probably going to result in a more valuable combined company despite the debt. GameStop had revenues of $3bn last year and eBay was $10-12bn, so combined it's $13-15bn. A net income increase of 1.2bn on that gross is a tall order for M&A efficiencies. Especially difficult when the two companies have essentially zero operational crossover, besides business admin. It doesn't seem likely to me that merging eBay's accounting/legal departments into GME's (and similar efficiency gains) is going to save anything close to a billion across the two entities.

59percentmore 6mo ago
I don't think this is a serious assessment. For years, the core business of both companies has been facilitating the flow of used goods. Gamestop has moved strongly into collectibles recently, with a partnership with collectible grading firm PSA and the introduction of (essentially) lucrative trading card lootboxes, whereas eBay has capitalized on the same expansion of the collectibles market with new live/flash auction features. IIRC, Gamestop recently had a "trade-in anything" day, where they accepted a variety of products for store credit. Seems an awful lot like this was some sort of test for accepting products in-store for eBay listings, or something along those lines. They already accept trading cards to send off to PSA for grading and to place into their lootbox system. As far as efficiencies go, you can see things like shifting shipping by individual sellers to mass shipping to/from a warehouse, a much heavier footprint in collectibles, and perhaps quality control that reduces buyer disputes (this one's a bit iffy).
- idiotsecant 6mo ago
  They are wildly different businesses. Ebay is not in the business of holding physical goods, they are a marketplace that connects buys, sellers, and shippers and adjudicates fraud, collects funds, handles taxes, etc. They are not a warehouse. Gatestop is a retail operation that buys and sells goods. It takes on all the liability for fake products, it puts capital on the line to purchase used goods, it is a totally different (and worse) business

Forgeties79 6mo ago

That is a massive “if”

SwellJoe 6mo ago

Which is a laughable argument.