GameStop is only worth 11 billion. Trying to buy a company worth 5x what they are…
They’re offering half cash (which they don’t have, because they’d be worth at least 25 bn if they did), no one is going to lend them that much money, because again, they don’t have the collateral to support it.
And they’re thinking they can sell more of their own stock to raise funds…diluting their current stock, which would require they sell 3x their present value in stock to acquire??? Diluting their current shares in the process.
Leverage buyouts are just a symptom of the problems in the system
In theory, leverage buyouts make perfect sense, kinda like a mortgage. You get a loan to buy something with that same as a collateral.
The fact that these usually ends in worse conditions for everyone is not because leverage buyouts are the problem, but the private ownership. Toys r’ us should have been owned by the workers, man utd by the fans, as so forth
I don’t understand how this deal can even happen
GameStop is only worth 11 billion. Trying to buy a company worth 5x what they are…
They’re offering half cash (which they don’t have, because they’d be worth at least 25 bn if they did), no one is going to lend them that much money, because again, they don’t have the collateral to support it.
And they’re thinking they can sell more of their own stock to raise funds…diluting their current stock, which would require they sell 3x their present value in stock to acquire??? Diluting their current shares in the process.
All leveraged buyouts ought to be illegal, not just this one.
Leverage buyouts are just a symptom of the problems in the system
In theory, leverage buyouts make perfect sense, kinda like a mortgage. You get a loan to buy something with that same as a collateral.
The fact that these usually ends in worse conditions for everyone is not because leverage buyouts are the problem, but the private ownership. Toys r’ us should have been owned by the workers, man utd by the fans, as so forth