James Woodcock
Byrne Robotics Member
Joined: 21 September 2007
Location: United Kingdom
Posts: 8480
|
| Posted: 04 May 2026 at 5:23am | IP Logged | 1
|
post reply
|
|
Just read that GameStop, an $11 billion company, wants to take over eBay
for $55 billion.
How?
By saddling eBay with the debt.
This is a playbook we see countless times in business and for the life of me,
I still cannot understand why it is acceptable.
I first became aware of it when the Glazers bought Manchester United and I
was puzzled then.
Clearly, GameStop does not have the money to do this and must take a
loan. Clearly, IT should have to pay that loan and its interest.
I get the thought process that says eBay has earnings, assets etc that value
it and people say those should be used as equity against the loan. I get that
as an argument.
But morally, time and time again, we see companies that do not have this
debt, get bought by opportunist companies who are much smaller, get
saddled with the financing, and thus what was profitable, suddenly
becomes non-profitable because everything has to be used to pay the
interest on the debt.
So morally, this is indefensible.
In the UK, we also have the example where two brothers bought the
supermarket Asda. At the time of the sale, Asda was profitable and owned
its buildings, it was owned by Walmart.
The brothers, to finance the sale, had Asda sell all its buildings.
The problem was, Asda now had to rent those buildings, a sudden massive
increase in operating costs, pushing it towards becoming a loss making
business.
Oh yes, who did Asda sell the buildings to? Another company owned by the
brothers who bought it. Nice way of taking profits from the company and
moving them to a personal thiefdom.
Again, why are these practices allowed? It is theft. We just refuse to call it
such.
|