Summary
- GameStop is proposing to raise its authorized share count from 1 billion to 2.5 billion shares.
- This proposal is part of five that will be presented for a vote at the annual shareholder meeting on July 7.
- The increase could enhance its capacity to pursue eBay after an initial bid was turned down.
GameStop (GME), the publicly listed retailer dealing in video games and collectibles, is seeking approval from its shareholders to raise its authorized share count to 2.5 billion shares, an increase from the current 1 billion, as noted in a filing with the SEC on Friday. This adjustment could support its ongoing efforts to acquire eBay.
The SEC filing outlines five proposals that will be submitted for approval during the company's annual shareholder meeting scheduled for July 7. Among these are updates regarding the board of directors and executive compensation plans for CEO Ryan Cohen and other executives.
The filing states, “Our balance sheet, operational improvements, and expanded capabilities position us to pursue opportunities that create meaningful long-term value for stockholders.” It emphasizes that the proposals, including the Authorized Shares Amendment and CEO Performance Award, aim to ensure decisive action when opportunities arise.
This strategic pursuit for long-term shareholder value follows GameStop's recent attempt to acquire eBay (EBAY) in a bid valued at over $55 billion, which was structured as a combination of stock and cash.
eBay rejected the unsolicited offer, deeming it “neither credible nor attractive” in a letter addressed to Cohen.
In spite of the rejection, GameStop has increased its stake in eBay, acquiring an additional 25 million common shares and further exposure through put/call pairs, as indicated in another SEC filing. The company now holds approximately 6% of eBay shares.
Should the increase in authorized shares be approved, GameStop may aim for an even larger acquisition of eBay shares.
“To maximize long-term value, the Company believes it must maintain maximum flexibility,” the proposal states. “This includes having the structural capacity to execute transformational acquisitions, large-scale investments, or other avenues of value creation, should the right opportunity meet our investment criteria.”
According to the proposal, “This authorization ensures the Board can pursue opportunities that meaningfully enhance intrinsic value per share without procedural delays.”
On Friday, GME shares fell by 1.93%, trading at around $22.06. Despite a 14% decline over the past month, shares have risen by more than 9.8% since the beginning of the year. Last year, the company purchased over $500 million in Bitcoin but transferred all but one BTC to Coinbase as it implements a covered call strategy to potentially generate income from its holdings.
Meanwhile, eBay's shares dipped by approximately 0.19% on Friday but have increased by more than 34% year-to-date.