GameStop (GME) CEO Ryan Cohen says the majority of eBay stake is made up of stock options

The CEO of GameStop has disclosed more information about the company's stake in eBay.

GameStop CEO Ryan Cohen joined CNBC's Squawk on the Street show this morning for an interview detailing the video game retailer's offer to acquire eBay. He also disclosed that the recently announced 5% stake in eBay is "currently, mostly derivatives, and there's a little bit of stock that puts us under the regulatory thresholds, but it's currently the majority of the position is derivatives.

GameStop has posted a press release last night about the offer to acquire eBay on its investor relations page.

Considering GameStop is valued nearly $44 billion lower than eBay's current market capitalization, Cohen responded to a question about eBay attempting to acquire Gamestop by saying that "I have the same obligation to my shareholders as eBay has to their's. And so, something like that were to happen then I the same obligation to maximize value for my shareholders as eBay has."

It's important to note that GameStop is likely now up on its options position in eBay as the news of this acquisition offer has drive shares of the ecommerce auction platform up nearly 10% in the past few days.

GameStop (GME) shares are currently digesting the news, currently trading down from the afterhours highs above $28/share that were set on Friday evening. Regarding how this eBay acquisition could accelerate his stock-based compensation incentives, Cohen said "I obviously want to build something much larger, but I don't benefit unless shareholders benefit. So my compensation package is aligned with shareholders, and I want to build a much larger business," adding "larger means maximizing shareholder value and increasing earnings."

Cohen addressed the potential for a massive amount of dilution coming to shareholders in the form of debt to finance this acquisition of eBay saying "if I don't hit the (stock-based compensation) thresholds, then I don't get anything." He also mentioned that "we have the ability to issue stock in order to get the deal done."

This is huge swing being taken by GameStop, and there are many things that could derail this proposed acquisition. It will be interesting to see just how large GameStop's options position in eBay is, and how that will impact the dynamics for financing the $56 billion. Cohen admits to implementing this options strategy to circumvent disclosure regulations, which certainly sounds like a bit of "legal" market manipulation is in play.

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

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At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:

Long GameStop via GME shares

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