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No offense, but TD isn’t quite Drexel Burnham back in the day. I can’t come up with a single example where TD has been the lead bank in a hostile deal, especially one where the two protagonists are U.S. companies. But let’s not be petty about TD. Frankly, the math alone shows just how ridiculous Cohen is being here.

Let’s give him credit for having nearly $30 billion in cash that he can use to buy eBay, between his balance sheet and the TD commitment. That leaves $25 billion in GameStop stock to fund the balance. Since the total value of the stock is currently $10 billion, he’d have to massively dilute his shareholders in order to issue $25 billion of stock. According to my back-of-the-envelope math, issuing those shares would give eBay ownership and control of around 71 percent of GameStop. Existing GameStop shareholders would own the balance of roughly 29 percent. So, yes, one reason Cohen had a hard time explaining his deal to Becky is that he’s actually proposing that eBay buy GameStop, not the other way around—a fact he no doubt did not want to admit on national television.

If eBay were somehow willing to agree to this insanity, the company would become GameStop’s largest shareholder and controlling owner. In other words, Cohen’s bid is a joke. That probably explains why eBay is trading at a roughly 12 percent discount to his $125-per-share bid for the company. The market, wisely, is not taking the bid seriously.

This would all seem highly embarrassing for Cohen—until you examine his new compensation package, which awards him options on 171 million new GameStop shares based on his achievement of certain EBITDA and market cap goals. For instance, he gets 10 percent of the new stock award if GameStop’s market cap doubles to $20 billion and its “cumulative” EBITDA, whatever that means, reaches $2 billion. (Cohen is predicting $2 billion of cost savings at eBay, by the way.) There are nine hurdles for Cohen to receive his new option package, with the final 15 percent tranche coming his way if GameStop’s market cap hits $100 billion and its cumulative EBITDA hits $10 billion.

I guess that explains why Cohen is far more concerned with growing GameStop’s EBITDA and market cap than with what would be massive ownership dilution to him and the existing GameStop shareholders. He basically told Melissa Lee as much. “There’s an opportunity to build a much larger business, to make the business much more efficient, and to accelerate revenue growth,” Cohen said. “And eBay is a very strong business. You look at GameStop as an example—GameStop, very difficult. The business should have been bankrupt multiple times over, and it’s doing okay. It’s making a few bucks. eBay is in a very, very strong position, but it could be in a much stronger position, and it could be a much larger business than what it currently is.” By the way, Cohen had an equally farcical appearance the following day on Fox Business, with Charles Payne cheering every step of the way (while admitting, toward the end, that he is a rah-rah GameStop shareholder, too).

The GameStop deal for eBay will never succeed as currently structured, but it’s certainly a valiant attempt by Cohen to make his option package get in the money. Back to the drawing board, Ryan.

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