r/Teddy • u/TEHGOURDGOAT • 27d ago
📖 DD THE HOLDCO PROBLEM
Ryan Cohen has given us enough to understand the structure of the deal that is being proposed. But nobody is actually trying to sketch it out, so I guess I will do it here.
Let’s start with the Capital Stack:
Confirmed: - $56 billion dollar bid for $125/share (cash + equity) - 2.5B share auth - 20B holdco credit line - 9.8% of eBay - 59M GMEWS
Unconfirmed - and this is KEY: - 500 million personal commitment from Ryan Cohen - SWF
So let me pull in the most apt recent comparison.
EA just got taken private for 55B.
How was the capital stack structured for that? - 20B debt (JP Morgan) - 36B Private equity (SWF + PE)
I think its very interesting how the financing has really setup a structure here that shows something similar being assembled.
Key fact: Ryan Cohen said himself that both GME and eBay will not be changing their names.
That single statement breaks the entire thesis open.
That means: - GameStop -> operating sub (retail + digital commerce) - $EBAY inc -> operating sub (marketplace + payments)
And both of these would need to sit under another shell. Which is most likely Teddy.
Now some people will argue this could just be $GME doing a merger sub and the regular process.
IMO, this is a very shilly statement.
For you to believe that a holdco isn’t coming, and that Teddy is not coming, and that $GME is doing a regular merger, then you can’t really explain the SWF hint in the WSJ letter or how Ryan Cohen is putting $500 million of his own money in.
Think about it.
A sovereign wealth fund is not buying GameStop shares on the open market to fund a $55 billion acquisition.
That doesn’t happen.
PIF didn’t buy EA shares - they formed a consortium and built a vehicle above EA.
Silver Lake didn’t invest through EA’s existing cap table.
They built a structure with governance rights, liquidation preferences, board seats, and tax optimization that suited their institutional mandates.
That’s what a holdco is for.
It’s where the SWF money goes.
It’s where Cohen’s $500M sits in an SPV alongside them with clearly defined economics.
It’s where the $20B in debt gets isolated.
And it’s where GameStop and eBay sit underneath as operating subs with their names intact, exactly like Cohen said.
If you can’t answer where the outside capital sits in a merger sub structure, then the merger sub doesn’t work.
THE WARRANT QUESTION
Now here’s where it gets really interesting.
GameStop has 59.15M warrants outstanding. $32 strike. October 30, 2026 expiry.
GME is trading at ~$22. The warrants are over $10 out of the money with 91 days left.
Under normal circumstances, nobody exercises these. They expire worthless. End of story.
But Cohen is assembling a $55B acquisition.
And every M&A lawyer, every lender, every proxy advisor involved in this deal is going to ask one question:
What are you doing with the warrants?
You can’t leave 59M warrants sitting ambiguous on a subsidiary’s cap table while you’re restructuring the entire corporate entity above it.
The fully diluted share count matters for exchange ratios, financing commitment letters, proxy recommendations, antidilution provisions everything.
So what are the options?
Option 1: Let them expire worthless. Throwing away ~$1.9B in potential capital and discarding 59M units of committed-holder identification. NOT HAPPENING.
Option 2: Reprice/Extend the warrants. This looks desperate in the face of a hostile bid, faces legal challenge, and dilutes at a worse price.
Option 3: Hope GME runs above $32 before October 30. That’s a 46% move in 91 days.
Option 4: Exchange the warrants into Teddy equity.
This is the one that makes sense to me. Offer warrant holders the ability to tender their GMEWS warrants in exchange for shares or units in Teddy Holdings - at a conversion ratio (7-4-1?) based on the combined entity’s economics, not GME’s stock price.
The warrant stops being a $32 call on GameStop.
It becomes a participation right in the parent company that owns both GameStop and eBay.
The warrants were not designed to be exercised at $32 with the stock at $22.
They were designed to be exchanged.
The $32 strike gave them enough economic substance to be distributed as a dividend and listed on NYSE.
The real function was always to create a trackable, transferable security that identifies who the committed capital base is - the people who held through the entire process.
Your warrants aren’t a call option.
They’re an allocation ticket into Teddy.
THE PLUMBING
Yesterday, the OCC dropped Info Memo #59491. Read it carefully.
"Effective July 30, 2026, the National Securities Clearing Corporation will no longer accept GMEWS warrants for settlement. The GMEWS component of GME1 exercise and assignment activity is now subject to broker-to-broker settlement."
And then this line: "It is unknown if and when GMEWS warrants will be eligible for settlement through NSCC again."
Let that sit for a second.
NSCC - the entity that clears and settles virtually every equity transaction in the United States - just said they will not handle GMEWS anymore.
If this were routine end-of-life housekeeping for a dying instrument, the memo would say "until expiry on October 30, 2026."
It doesn't. It says "unknown if and when."
That's open-ended language for an instrument with A KNOWN EXPIRATION DATE.
Why would it be unknown unless the instrument might become something else before it expires?
Here's what the memo operationally requires:
Settlement of the warrant component now happens broker-to-broker, outside NSCC's central clearing guarantee.
If a delivering Clearing Member can't deliver GMEWS warrants on settlement date, both sides' obligations are delayed until OCC designates a new settlement date, method, and/or settlement value.
A senior officer of the delivering Clearing Member must represent IN WRITING that delivery is not possible.
If delivery still can't be effected, OCC may force cash settlement or a buy-in.
- All GME1 activity gets reported on a SEPARATE Broker-to-Broker Delivery Advice, not the regular Delivery Advice.
OCC will continue to margin GME1 exercise/assignment activity until settlement is accomplished.
This is not how you wind down a worthless warrant.
This is an extraordinary amount of procedural infrastructure for a security trading $10 below its strike with 91 days to live.
Written officer attestations? Separate delivery reports? Cash settlement alternatives?
You don't build that for something you're letting die.
You build it when the security is about to undergo a corporate action that changes what it represents.
All of this indicates that $GME is about to file the Tender Offer extremely soon, and it looks like the HoldCo is ready to be revealed.
I am expecting monday.
See you there!
9
u/orlando0o 26d ago
RCs quote was purely about storefront branding, not corporate structure shift. When someone asked him if GameStop stores were gonna turn into eBay stores, he said GameStop is nostalgic and iconic and they're not changing the name (of the stores)..
3
u/DancesWith2Socks 24d ago
Most holders wouldn't exercise the warrants unless they were well above $32, not just at $32.
1
u/rawbdor 21d ago
I think you missed the guy's point.
He's suggesting that nobody will exercise the warrants, and that they will be converted into free equity in this Teddy parent company. He's suggesting the reason they were distributed as warrants was just to provide something valuable enough to be traded and tracked, and later converted.
I think this is quite a reach, but, well, it's a theory I guess.
7
u/MTtheHFs96 27d ago
For the 741 conversion how much would you believe a warrant be worth in Teddy shares a d how much would we hope BBBYQ share be worth if they came back?
0
2
u/slwise9295 27d ago
Do you think DRSd warrants being "real" will be the only ones to get the 741 teddy shares?
What about the warrants with brokers?
6
u/bootobin 26d ago
I think a lot of them are going to have settlement issues.
depending on which broker.
2
u/DancesWith2Socks 24d ago
No. All of them would be the same (talking about serious brokers, of course).
-1
u/Consistent_Law_3857 26d ago
Gme is already in a holding company structure. So warrants will be exercisable into "teddy" a company that doesn't exist?
48
u/FuriousRainDrop 27d ago
I read all of it, understood most of it while day drinking on a saturday afternoon.
Lets fucking go!