For the benefit of all the people on this thread not understanding what the proposal is for the acqusition:
"A leveraged buyout (LBO) is the acquisition of a company (typically by a private equity firm) using a significant amount of borrowed money (debt) to meet the purchase price, often 60% to 90% of the total cost. The target company’s assets are used as collateral for the loans, which are repaid using the company's future cash flows."
Everybody understands the proposal. They also understand that an offer of $20 billion loan + $7.5b cash in hand + stock in Gamestop valued by the market at $11b = $37.5b, which is < $55b, a discrepancy Cohen has not been able to account for. Ebay also understands that leveraged buy-outs are a death sentence, and that saddling its operations with $20b of debt in exchange for gaining a dead business like Gamestop would eventually kill it.
Also when you count that 7.5B cash on hand as part of the deal to me that's to some extent double counting to include it and the current market value of all of GME's stock. At least part of the stock's value comes from the existence of the cash so it's not wholly separate from the value of the stock.
The $20B letter from TB is the leveraged part of the buy out and the math still doesn't add up even if you for some reason allow GME to dispose of all their cash in the deal without taking a hit to their stock price.
In a leveraged buyout you actually buy out the company so you take the risk of the debt and the sellers get the cash... Trying to do a 50% cash, 50% share deal, (where the shares hold the debt that generated the cash) is asking eBay's shareholders to be paid with cash borrowed from themselves!
This pattern of acquiring a company via debt financed on the value of the company is a leveraged buyout, is far from new and it's definitely quite corrosive to the finances of the new company. The pattern that plays out time and time again is the new debt from the acquisition severely hampers the new entity's ability to actually make the changes that might save them other than the chance to be raided by the buyer's management firm of choice.
For the benefit of all the people on this thread not understanding what the proposal is for the acqusition: "A leveraged buyout (LBO) is the acquisition of a company (typically by a private equity firm) using a significant amount of borrowed money (debt) to meet the purchase price, often 60% to 90% of the total cost. The target company’s assets are used as collateral for the loans, which are repaid using the company's future cash flows."