Ryan Cohen Slams eBay as 'Run by Losers' After $56B Bid Rejection — 'We'd Be Getting Rid of the Board'

In a recent interview with Piers Morgan, GameStop CEO Ryan Cohen made shocking revelations about eBay's management, how he plans to take over despite pushback, as well as his vision of running the company.

Cohen, who earlier founded Chewy and sold it for over $3 billion, believes that eBay has a solid business model but is 'run by losers' who pocket millions of dollars in risk-free compensation. For them, Cohen thinks it is just a paycheck and a job, and if a deal is ever reached, 'we'd be getting rid of the board.'

eBay management cited multiple reasons for rejecting GameStop's $55.5 billion acquisition bid, including doubts over Cohen's ability to manage the exorbitant financing, confidence in eBay doing well as a standalone company, as well as operations risks and the leadership structure of the combined entity that could impact eBay's long-term valuation.

However, Cohen cleared the air about how he plans to finance the eBay takeover. The company has over $9 billion in cash and equivalents on its balance sheet. Around $20 billion would come from banks, while the remaining would be issued in stocks.

'In this case, it is less about the actual financing, more about dealing with an entrenched board' that has 'zero skin in the game,' he said.

Cohen agrees that his company's offer could be unattractive to eBay management because if the deal goes through, as 'the board that made $4 million in director fees last year is kaput. They are gone.' He even highlighted that eBay CEO hasn't invested a single dollar since assuming the post in six years.

Right now, GameStop has to deal with eBay owners rather than the management team with 'perverse financial incentives', because they are just employees seeking a paycheck, and not the owners.

'I don't like the board of directors. I have such disdain for these people that make millions of dollars in risk-free compensation, and everything is done in the name of corporate governance,' he added.

Cohen on Michael Burry Offloading GameStop Shares

The Big Short investor Michael Burry sold his entire GameStop stake after learning that the company offered to take over eBay. Burry was worried that the merger would mean GameStop would have to compete with retail giants like Amazon. He thought that the price offered to eBay was also too high and that GameStop had better acquisition targets if they planned to buy a company anyway.

The GameStop-eBay merger would likely carry much more leverage, 'to a level of debt that borders on distressed and tends to strip competitiveness and innovation from such-stricken companies. If Ryan really wanted to compete with Amazon, he would have acquired Wayfair along with a cash flow machine and a bunch of floats,' Burry had advised.

However, Cohen said he was surprised by the lack of understanding of the deal structure, where eBay shareholders will continue to own the company, except it will be run by an owner operator.

'There is going to be leverage, more leverage than he [Burry] likely anticipated, but I don't want to run a leverage business... I feel very good about our prospects to cut $2 billion of costs out of the business.

As an owner-operator, Cohen said he is different from those 'country club executives' hired through professional agencies. 'My incentives are aligned with maximising shareholder value' by making the business strong and more profitable, he added.

In all, Cohen does not plan to directly compete with Amazon but focus on the company's moats that helped it survive to date. He plans to explore all options for the deal to happen, even getting in touch with US President Donald Trump if it's 'appropriate and makes sense.'