GameStop hits the limits of credibility with $55.5bn eBay bid | Nils Pratley
“Neither credible nor attractive.” No, not a line from a junior minister’s resignation letter on Tuesday.It was eBay’s succinct appraisal of the bizarre $55.5bn (£41bn) takeover offer from video games retailer GameStop, an affair that offers light distraction from the sight of UK 10-year gilt yields at 5%-plus.To recap: GameStop is the “meme stock” company that became famous a few years ago when amateur traders on a Reddit forum piled in furiously in an attempt to burn the short-sellers who were betting on the struggling retailer’s demise.
Surprisingly, the Redditers succeeded beyond their wildest dreams.The squeeze drove up GameStop’s share price hundredfold, inflicting hell on serious hedge funds and making the company’s chief executive, Ryan Cohen, an anti-establishment hero.Even more surprisingly, GameStop is still around and showing better trading numbers.But, crucially, it was still worth only $11bn at the start of this month when Cohen announced an audacious proposal to buy the online marketplace eBay, a company four times its size, at $125 a share, to be funded half in cash and half by the issuance of an avalanche of new GameStop shares.The eBay board clearly takes the view that Cohen’s pitch is more absurd than audacious, and you can’t blame it.
Of the advertised $28bn of cash in the offer, $20bn is represented by a non-binding “expression of confidence” from Canadian TD Bank that GameStop could raise the money if it gets an investment grade rating from two top credit agencies, a prospect that is far from certain given the financial leverage the transaction would require.That, presumably, is what eBay means by the credibility deficit.Nor does eBay obviously need a deal with anyone.Its board may be scandalously overpaid, as Cohen says, but most are in corporate America.The relevant fact is that eBay’s shares have improved 50% in the past 12 months, so why on earth would its owners want to swap into GameStop stock, a currency that is hard to value at the best of times?If the answer is supposed to be the chance to install Cohen as their new chief executive, the would-be visionary surely has to offer a better alternative strategy for eBay than cutting the marketing budget in half and hoping for cross-over benefits between eBay’s online operation and GameStop’s 1,600 stores.
“The more [eBay] fights me, the more … I’m not going to take no for an answer,” Cohen told the FT last week.“I’m not going away.I’m a pain in the ass.” One hopes he means it, because it would imply a formal hostile bid for eBay, providing hours more entertainment – and perhaps even a repeat of his wonderfully surly interview with CNBC on day one of this saga.It is semi-obligatory to say one should not underestimate GameStop or Cohen, because the 2021 stock-buying frenzy was a genuine against-the-odds coup.
On this occasion, however, he would seem to lack the necessary momentum,GameStop’s shares are down since the start of the latest adventure, suggesting even the fanclub has its doubts,Meme-style short squeezes are one thing; a hit-and-hope $56bn reverse takeover bid may, in the word of the day, be untenable,
Did breakthrough in US fentanyl crisis start in China?
As Donald Trump travels to Beijing this week, fentanyl – and China’s role in its supply chain – remains an enduring point of acrimony in bilateral relations.At a UN meeting in March, the US again accused China of failing to stop its chemical industry selling the precursors required to make the potent synthetic opioid, while China suggested the US was shifting the blame for its domestic drug problem.Yet there are growing signs that the US fentanyl crisis has turned a corner – and some experts believe that interventions made in China have played a key role.“There was a supply shock: the purity of fentanyl fell,” said Keith Humphreys, a professor at Stanford University. “The question is why was there a supply shock
Older people risk mental decline if they do long hours of caring, UK study shows
The stresses and strains of caring for someone for 50 hours or more a week leads to “accelerated cognitive decline” in middle-aged and older people, research shows.However, providing care for only five to nine hours a week has the opposite effect, boosting brain health so much that the benefits last until older age.Carers UK called the findings “extremely worrying” and said they highlight how long hours spent providing care raises the risk of social isolation and burnout.Dr Baowen Xue, an academic at University College London and the lead author of the paper, said: “Our study shows that the caring responsibilities many people take on in later life can be a double-edged sword.“On the one hand, lighter caring responsibilities can be good for you by providing mental stimulation from interacting with loved ones or others you’re helping and a sense of purpose and usefulness
Steve Lismore obituary
My partner, Steve Lismore, who has died aged 71 in a climbing accident in Italy, was a civil servant and local politician with twin passions for giving children a good start in life and establishing equality of access to employment. Steve’s energy and commitment to action has had a lasting impact across north Derbyshire.Born in Toronto, Canada, to Violet (nee Greaves), a secretary, and Basil Lismore, a toolmaker, Steve loved reading and excelled at Bayview Heights school, Ontario, skipping a grade and winning awards at science fairs.His approach to life was formed in his teens. He combined adventure, practicality and ingenuity as he coaxed cheap motorbikes to ever improved performance
Renters’ Rights Act could worsen court delays without proper funding | Letters
The new Renters’ Rights Act is a step forward in ensuring that both tenants and landlords can access justice, but without proper investment it risks creating new court delays and injustices for both parties (The Guardian view on the Renters’ Rights Act: finally, protections fit for the modern housing market, 5 May).The end of “no fault” evictions in England is expected to lead to an increase in the number of contested repossession cases. If courts do not have the funding to handle the increase, delays will grow and leave many people in limbo, as we have recently seen with the closure of the Hillingdon Law Centre.This investment must include further funding for housing legal aid. While last year the UK government pledged to increase the fees paid to housing legal aid firms, those changes are yet to be fully implemented
‘Everyone was in tears’: the tenants given eviction notices just before ban in England
It was 2pm on 30 April when Carl Kansinde Middleton received a “no fault” eviction from his landlord in Brighton – just 10 hours before section 21 notices were officially banned under the Renters’ Right Act.“As we were getting closer, I really thought I was safe,” he said. “It just never occurred to me that it would just come right on the last day – I truly felt blindsided.“I lost my job in November and it’s been a struggle for me financially as I have no support system. I was just about treading water but this has swept me under
Ash scattering is a risky business | Brief letters
I had a similar experience to Zoe Williams (The day had come to scatter my mum’s ashes. What could possibly go wrong?, 5 May) when I scattered my dad’s ashes near the first tee at his golf club. After reaching into the urn and grabbing a large handful of his ashes, I threw them into the air only to have them all blown back at me by a sudden gust of wind. Friends always said I looked very much like him and I felt a tremendous sense of pride as parts of him went into every orifice.Bob DawsonGreenmount, Greater Manchester Glad to read about the campaign to save the mother of Bramley apples tree (Report, 5 May)
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