GameStop Seeks Approval to Increase Authorized Shares to 2.5B

GameStop filed with the Securities and Exchange Commission asking shareholders to approve an increase in its authorized share count to 2.5 billion from the current 1 billion. The proposal is one of five items scheduled for a vote at the company’s July 7 annual meeting.

The SEC filing outlines the Authorized Shares Amendment along with updates to the board of directors and executive compensation plans, including a CEO Performance Award tied to Ryan Cohen. The filing states the company’s stronger balance sheet and operational changes position it to pursue opportunities that create long-term value for stockholders. The filing reads: “To maximize long-term value, the Company believes it must maintain maximum flexibility” and that the proposals are intended to allow the company to “act decisively when those opportunities arise.”

The request follows GameStop’s unsolicited half-stock, half-cash offer for eBay valued at about $55.5 billion. eBay’s board rejected the proposal; eBay chairman Paul Pressler wrote in a letter to Cohen that the offer was “neither credible nor attractive.”

After the rejection, GameStop increased its exposure to eBay by purchasing 25 million common shares and adding derivative positions, disclosures show. Those purchases raised GameStop’s stake in eBay to roughly 6 percent, triggering SEC disclosure requirements for owners of more than 5 percent of a public company.

The filing says raising the authorized share count would provide the structural capacity to issue additional shares for large transactions, financing or to acquire stakes in other companies. The company added that a higher authorized count would remove procedural delays that could impede rapid execution of qualifying transactions.

Shareholders will vote on the proposals at the July 7 meeting. The filing does not lay out a specific plan to use the additional shares to buy more eBay stock but lists potential uses such as acquisitions, financing or taking larger positions in other firms.

Market reaction to the filings was modest. GameStop shares traded down about 1.9 percent on Friday at near $22.06, leaving the stock down roughly 14 percent over the past month and up nearly 10 percent year-to-date. eBay’s shares were little changed on the day and have gained more than 34 percent year-to-date. The filing also noted GameStop’s prior purchase of more than $500 million of bitcoin last year and the subsequent transfer of all but one bitcoin to Coinbase as part of a covered-call strategy to generate potential income on its holdings.

The shareholder vote will determine whether GameStop obtains the additional equity capacity described in the filing.