GameStop Corp. proposed to acquire eBay Inc. for approximately $56 billion, offering $125 per share in a mix of 50% cash and 50% GameStop stock, according to a letter from CEO Ryan Cohen to eBay's board. The bid represents a 20% premium to eBay's Friday closing price of about $104 per share.

The offer emerged after The Wall Street Journal reported Friday that GameStop was preparing a bid and had accumulated a roughly 5% stake in eBay shares since early February. GameStop, with a market value of around $12 billion, has about $9.4 billion in cash and secured a commitment from TD Bank for up to $20 billion in debt financing to support the deal.

Cohen, who founded Chewy and took over as GameStop CEO in 2023, outlined ambitious plans for the combined company. He pledged to cut $2 billion from eBay's annual costs within 12 months, leveraging GameStop's 1,600 U.S. stores for authentication, fulfillment, and live commerce of collectibles such as trading cards. "It could be a legit competitor to Amazon," Cohen told the Journal. He added, "eBay should be worth, and will be worth a lot more money," and aims to turn it into a business worth "hundreds of billions of dollars." Cohen would serve as CEO of the merged entity without a salary, compensated only on performance, and is prepared to launch a proxy fight if eBay's board rejects the proposal.

GameStop has transformed under Cohen from a struggling video game retailer into a cash-rich entity focused on high-margin collectibles, closing stores, and exiting international markets. Its shares have risen over 30% this year amid speculation on dealmaking. eBay, valued at about $46 billion, has shifted toward niches like collectibles and reported strong first-quarter results with gross merchandise volume up 18%, but faces competition from Amazon and others.

eBay shares surged as much as 13% in after-hours trading on Friday following the initial report and continued to rise, while GameStop shares gained around 4%. eBay has not commented on the offer.

The deal faces hurdles given GameStop's smaller size and the need for regulatory and shareholder approvals. Some analysts question the logic, noting eBay's recent progress in its niche focus. Cohen's compensation could reach $35 billion if GameStop hits a $100 billion valuation.