GameStop's eBay Bid Is So Befuddling Even Merger Arbs Are Steering Clear

On paper, GameStop Corp.’s head-turning $56 billion bid for eBay Inc. offers a potential fat profit for investors willing to wager on the unconventional deal. In practice, merger specialists aren’t buying it.

The gambit, conceived by the gaming retailer’s billionaire chief executive Ryan Cohen and unveiled on Monday, involves an unsolicited bid for a target four times the size of his own company at $125 per share in cash and stock. That represented a 20% premium to Friday’s close. Instead of piling into the shares to lock in the differential, though, investors have largely stayed away.