Forget Earnings Season. It’s Takeover Season.

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Jon Quast, Rachel Warren, and Travis Hoium discuss:

• GameStop’s $100 billion market cap ambition
• The potential acquisition of eBay
• Anthropic’s rumored interest in Atlassian
• Other software companies that may be attractive targets
• Hidden gem lessons from Berkshire Hathaway

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on May 5, 2026.

Jon Quast: You can forget earnings season. It's suddenly takeover season. You're listening to Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I'm Jon Quast, and I'm joined by Fool contributors Rachel Warren, and filling in for us today is Travis Hoium. Today, we have a show that is going to center around mergers and acquisitions, even though we're in the throes of earnings season, but the weekend news flow about acquisitions was just too juicy to pass up. We're going to try to be true to our Hidden Gems theme here. We're going to try to look at some hidden things that might make acquisition better than others; make it break it.

But let's start with the lead here, and it's the big headline over the weekend. That's it; GameStop is entering the conversation. Let me frame this. Back in January, GameStop CEO Ryan Cohen said he was looking for an acquisition. He said the acquisition needed to be big. In fact, he said it needed to be very, very, very big. He was looking for a resilient business. He was looking for an undervalued, publicly traded company, and specifically looking for sleepy management, in his words. Now we know what the company is. They are targeting eBay. Over the weekend, GameStop, a company with a market cap of about 11 billion, offered to acquire eBay for nearly 56 billion, and it's a complete takeover. Ryan Cohen is proposing himself as the new CEO of the combined company, and it's just a crazy deal. Have we ever seen anything like this, and is it even possible?

Rachel Warren: There's definitely historical precedent for this. You have a famous example back in the 1980s with Capital Cities. They're a relatively small media company. They acquired ABC. That was a company that was nearly four times its size at the time. Of course, back then, that deal was very much financed by famous investor Warren Buffett, the Oracle of Omaha himself. He provided about $500 million in exchange for up to a 25% share in the combined company. That deal was one of many that proved that you could have a smaller, more aggressive firm swallow a corporate giant if they had the right financial backing.

Now, you talk about this GameStop and eBay proposed deal to fund the cash portion of this deal. Ryan Cohen secured a $20 billion debt financing commitment from TD Securities. That's the investment banking arm of TD Bank. The idea is this would act as a bridge between GameStop's existing cash pile and the total offer. It's a risky maneuver. GameStop offered $125 a share and a 50-50 cash-and-stock deal. That actually represented about a 20% premium over eBay's Friday share price close. But I think you also see a situation where Cohen has to convince the market that this combined entity would be more valuable. The two companies stand alone. If the board were to refuse the offer, if the board of eBay refuses the offer, I think maybe the only path forward is some kind of a hostile proxy fight. This will be really interesting to see play out.

Travis Hoium: It's definitely happened before. This isn't completely new. We could go back to Norwest buying Wells Fargo in 1988, essentially just took over the name, Wells Fargo. Kmart bought Sears. Remember that was when Eddie Lampert made his name known. I don't know that that's necessarily worked out over the past 20 years or so.

Jon Quast: I don't know if GameStop wants to be Kmart.

Travis Hoium: That's not necessarily a great omen for them. I've been following gaming for 20 years, and Eldorado, which was a company that most of us had never heard of a couple of years before that, bought Caesars Entertainment. This has happened before. It is a situation where GameStop has to figure out where in the world they go next. Their business isn't exactly doing great. It might as well buy something, and eBay's for sale.

Jon Quast: I feel like it's worth pointing out here that GameStop has quietly acquired a 5% stake in eBay, according to Cohen. Now, this is not pure shares here. There's some derivatives involved here, but it's essentially following the same playbook that Cohen ran. If you remember, Cohen is not the founder of GameStop. He's not the longtime executive. He actually acquired enough of the company to essentially take it over a couple of years ago, put himself in the CEO chair, and it's worth pointing out that his pay package is tied to GameStop's market cap reaching $100 billion. It's not tied to an operating metric. It is tied to the market cap of the company. Certainly, an incentive here to grow the business.

Rachel Warren: That incentive structure is an interesting one to note. You look back. Cohen used this very methodical multistep campaign to gain control of GameStop. He began with a 9% stake that he boosted eventually to 13%. He used his position back in the day; he penned this blistering public letter to the board. He was criticizing their lack of vision. He labeled them outdated. He pressured and forced the company to give him three board seats. Obviously, GameStop has seen some significant turnaround under his leadership. Once he was inside the boardroom, he pushed out the legacy CEO. He was very successful to that end.

Now, his current move on eBay follows something of a similar pattern, but the scale of the target is really different here. You had GameStop, very much a struggling retailer that he could fix with a few hundred million dollars injected into the business. eBay is this established e-commerce giant. It's worth tens of billions. Requires a level of outside financing and market cooperation that he didn't need the first time. It's certainly not a one-to-one comparison, even though some of his strategy is definitely similar.

Travis Hoium: Let's keep in mind that part of the strategy is keeping the meme going. GameStop is not exactly a thriving business today. I think that's putting it mildly; over the past 10 years, their compound annual revenue growth rate is -8%. The company has shrunk under Cohen, so it isn't like he's some operational mastermind who turned around GameStop from being a struggling retailer to now a thriving retailer. They're still a struggling retailer. That's going to be fundamentally the question here is, can he convince the market that the story is worth buying? That's really the biggest question for investors going forward. This isn't the kind of acquisition that I'm a huge fan of as an investor, because it is not, as you mentioned, really fundamentally driven. It's really more meme- or story-driven. That's something he's got a lot of work to convince people that he's going to be able to build a $100 billion business.

Jon Quast: In fairness, you're talking about the top line. GameStop is certainly still struggling there, and there is questions on the long-term viability of that business, given all the changes that is happening in the gaming space, a lot more not a physical product anymore. That is certainly playing into it. But you do have, under Cohen's leadership, going from losses to net income, trailing 12 months of 400 million. To that point, definitely, to Rachel's point of blistering letters, writing here that basically he can increase eBay's earnings per share, 80% in the first year by cutting waste. Travis, do you think that he has a point here?

Travis Hoium: There's maybe a little bit of a point, but at the end of the day, yes, you're right. GameStop is probably a more efficiently run company today. They are making an operating profit. They do have a little bit of operating leverage. But how valuable is operating leverage when your top line is still in decline, when you're still fundamentally not in a growth business long term? I think that's really the challenge. Is this going to be a cigarette butt company if we go back to the old Warren Buffett days? Hey, there's still a little bit of cash flow to generate here, and we're just going to suck everything we can out of it and then let the business die? I don't think that's the story that he's trying to give to the market, but that's what you get if you have a declining revenue business and increasing operating profit. You're getting operating leverage at the cost of actually growing the business, so it's a little bit of a tough position for them to be in.

Jon Quast: I just want to acknowledge one thing as we close this segment. I feel like this is that domino meme. If you've seen the little tiny domino, and it finally knocks over a huge domino. It is just crazy to me that if we rewind the clock, it all started with a guy named Roaring Kitty on Reddit saying that he liked the stock. Next thing, you have the co-founder of Chewy buying GameStop, and now we have a potential takeover of the 10th-largest e-commerce platform in the world. You never know what one little domino's going to knock over. We'll keep an eye on this because this is potentially something that would disrupt the e-commerce space. We'll just keep an eye on it. After the break, we are talking about another potential acquisition from AI giant Anthropic. You're listening to Motley Fool Hidden Gems Investing.

Welcome back to Motley Fool Hidden Gems Investing. On this second segment, I want to be extremely clear up front. We are about to talk about a rumor. In our last segment, we talked about a real proposal. You can go to GameStop's website. The proposal is there. You can read the documents, see the numbers. That proposal is real. This segment, we are talking about a rumor that is floating around out there, but it is so fascinating that I really feel like we need to touch it. Here's the rumor. The rumor is that AI giant Anthropic, the maker of Claude, is interested in acquiring enterprise software company Atlassian. Now, what's fascinating about this rumor to me is that we've been talking about how AI is going to kill software, or at least that's the prevailing narrative. But if this rumor is true, then somehow an AI company would want to buy a downtrodden software company. In light of that narrative, how possible do you think it is that this is true, Travis?

Travis Hoium: It's very possible that it's true. We've got to think about this strategically first. If you are Anthropic, you're dealing with a competitive market in the model space. We know that they were the hottest thing in the market in early 2026. It seems like even just over the past few weeks, they've been overtaken again by Codex from OpenAI. In this back-and-forth market, how do you build a durable business that's actually going to be worth the however many hundreds of billions or trillions of dollars these companies think they're going to IPO for at some point in the near future? One of the ways that you're going to do that is you're going to get distribution and data within your ecosystem. Atlassian has distribution. They have products. They have data that companies put into Atlassian's products. That's going to create something of a flywheel for Anthropic potentially, if they bought this company, and it would make them a little bit stickier in some of the enterprise businesses.

The interesting thing here, we saw the deal between xAI and Cursor a week or two ago. That was Cursor proposed being acquired by xAI, SpaceX, whatever it's going to be after they actually go public. The idea there was Cursor was actually in a fairly weak strategic position because they were being replaced by Claude and Codex, actually pulling their customers away from Cursor as the place that they were actually doing their coding. Things are changing so quickly in artificial intelligence that even though, Anthropic and Claude, arguably one of the fastest-growing companies we've ever seen at this scale. It is still a tenuous position. They don't have a huge moat around the business, and this would potentially start to build that moat. I think that's the way to think about it.

Jon Quast: Basically what you're saying here is that perhaps Claude could build better products, but the real deal here is that Atlassian has customers that it already has in the hopper. It's got this huge distribution, and that would be the competitive advantage if it could get its hands on that. That's one thing it doesn't have. Rachel, do you think that Anthropic's Claude could make Atlassian's products better?

Rachel Warren: I absolutely think that's the case. We've been having this discussion for months now about how these types of models, like Anthropic's Claude, could potentially replace some of these software businesses. That's obviously been the concern we've seen permeating the markets, impacting a lot of software stocks. I don't think they replace the software businesses. I think we can very much see a dynamic where some of these larger AI companies see the value in these software platforms and try to integrate them into their own ecosystem. You think about how Anthropic has the brains of AI with Claude. Atlassian has the territory. Millions of developers, project managers already live inside platforms like Jira and Confluence every day. By acquiring them, if this rumor is to be believed, Anthropic wouldn't just be a service that developers call upon. They could become brilliant infrastructure where work actually happens, and from a strategic standpoint, an AI giant would want a software developer like Atlassian for that data and distribution advantage. Atlassian sits on a gold mine of proprietary data. Decades of how teams collaborate, how bugs are fixed, how products are shipped. I do think that this could turn Claude from a helpful assistant to more of an autonomous worker that has access to the levers of a company's operation. It makes sense from that perspective.

Travis Hoium: Jon, let's also tie this back to the GameStop acquisition. GameStop is using a very highly valued stock to buy a company that is theoretically a value company. You combine those two companies, and you get a maybe more reasonably valued company when it's all said and done. You could look at it the same way with something like Atlassian. If this deal does go through. Anthropic is not cash flow positive; Atlassian is. If you look at their market cap, currently $24 billion, let's say they have to pay a bit of a premium. They sell for $30 billion. You're also bringing in $1.2 billion worth of free cash flow. You're acquiring customers, you're acquiring data, and you're acquiring a business that's actually generating cash. You combine your cash losses with their free cash flow; maybe you have a little bit less cash needs, and all it costs you was a fraction of the shares that you have outstanding. That's where it could potentially make sense both strategically and within this financial game that all these companies are playing.

Jon Quast: That's the thing about investing that I just love. There are so many angles to look at, and often the most simple narrative is not the right narrative. We'll be keeping an eye on AI and software in the weeks and months ahead. When we come back from the break, we're talking mergers and acquisitions and pulling some Hidden Gems lessons from huge company Berkshire Hathaway. You're listening to Motley Fool Hidden Gems Investing.

Welcome back to Motley Fool Hidden Gems Investing. We want to make you part of the conversation here. If you have a stock or investing question for Travis, Rachel, myself, anyone else on the show, you can email us at podcast@fool.com, and we would love to have mailback segments. We're not doing one today, but we do like to have them quite often. Just send your questions. Remember to keep them Foolish; keep them short so we can read them on air. That email again is podcast@fool.com.

We want to close here with Berkshire Hathaway. New CEO Greg Abel just completed his first running of the annual meeting in Omaha over the weekend. Of course, questions came up about his vision and strategy. Questions is a huge conglomerate. Are you going to break it up? Are you going to sell some of the assets? Essentially Abel said, No, we're not going to do that. It doesn't have layers of management, so it believes it's a very efficient conglomerate, and then it wants to hang on to what it has. But as we think about this whole topic of takeovers, mergers, acquisitions, what is some hidden traits, some hidden takeaways that we can take away? Mergers and acquisitions happen all the time on the stock market. What should our listeners be looking for? What is the DNA of a good deal? Let's use Berkshire Hathaway here to frame the narrative because it has made so many good deals over the years. I'm going to throw here to you first, Rachel: what's a good deal that Berkshire has made in the past, and then we're going to talk about maybe what the hidden takeaway is.

Rachel Warren: This is an easy one, but one of the most famous and arguably one of the best was GEICO. This is an interesting one, too, because Buffett first invested in GEICO back in the 1950s. He had gradually increased his stake over several decades, and then Berkshire acquired GEICO by purchasing about the remaining 49% of the company that didn't already own for about $2.3 billion back in the 90s. But one of the things that I think made this deal such a masterpiece was not just the brand of GEICO. It was the insurance float, the pool of money collected from premiums that have not been paid out and claims yet, and Buffett had realized that GEICO provided this massive ongoing pile of low- to no-cost capital that he could use to buy other companies. The genius wasn't really just in the insurance business. It was in using that business as a funding engine for everything else. The Berkshire gold standard for a merger is one that pays for itself through its own cash flow without diluting the original owners. I think that is a great example.

Jon Quast: Rachel, one of the points here would be that GEICO was just so big and established at the time, and Buffett knew it extremely well. He was in love with GEICO when Berkshire acquired it. You see it so often with a merger or acquisition on the stock market. Often, it's very speculative.

Rachel Warren: Absolutely. One of the things that we've seen Buffett stress over the many decades is the importance of staying within one circle of competence. This is a business he knew extremely well before it came into the Berkshire fold, and I think that that probably underscores his strategy through the decades better than many of the other companies, even currently in their portfolio.

Jon Quast: Maybe if our listeners are looking at a merger and acquisition that's happening out there, let's see if it's an established business or one that's a lot more speculative. Let's see if management even knows that business that it's buying. Oftentimes, there's desperation grasping at something that it doesn't know well. One thing to look for for sure, Travis, let's go to you now. What was a Berkshire deal that stood out to you?

Travis Hoium: You could easily make a case for Apple; that was about a decade ago they started building that position. See's Candy has a lot of attention, especially in their lore. I look back at Nebraska Furniture Mart. We don't know exactly what is historically true and what's the legend of Buffett and building Berkshire Hathaway. But I read that he didn't even do due diligence on the acquisition because he trusted Rose Blumkin so much. She was the one that started and ran Nebraska Furniture Mart. But bought a 90% stake in the company for $60 million. That was a company doing $100 million worth of sales. Reportedly, the business is doing about $1.6 billion in sales today. It's not a massive growth business. They bought this in 1983, but it's a solid growth business. It's generating positive free cash flow.

This just falls into Buffett's wheelhouse because it was a price that we often don't see in markets today. It was a deal with somebody that he was very familiar with. I remember Munger in an interview saying something like, Hey, we did a lot of deals with the same people for decades. The only reason that people remember us is because we're still alive. It's just classic Buffett. Even Rose Blumkin should be part of the myth of Berkshire Hathaway. Buffett joked that he would have to make mandatory retirement age 103 because she worked until 103, tried retiring at 95, but she got bored. It's just classic Buffett in all kinds of different ways, but more legacy Buffett from the ‘60s, ‘70s, ‘80s, picking up these companies for what we would see as incredibly cheap prices today because he did the work that no one else was willing to do at the time.

Jon Quast: That's such a good point. There have been many. It's particularly in the software space, many acquisitions that have gone sideways because they're paying just an exorbitant amount of money for these companies that have very unproven track records or have really questionable financials. Not always the case. Sears will acquire United Rentals. I've seen it get deals for like 10 times earnings before. That's a great deal, and it's additive to the business. But that's not always the case. But there does need to be value when you acquire another company.

Travis Hoium: Absolutely. The other thing is the durability of the business. I'm here in the Midwest, and there is something about some of these family-run businesses. The Nebraska Furniture Mart doesn't do anything crazy. They don't do anything sexy. They sell furniture, but people go there because they've been going there for years or for decades. That's the way that a lot of businesses run. Especially maybe in the Midwest, and I'm more familiar with that being here, but probably every part of the country and every part of the world is there are just these rock-solid businesses that are going to exist forever because they sell something that people need, and Buffett was happy to scoop them off if the price was right.

Jon Quast: Well, listeners, if takeover season does start to really ramp up, we hope that our discussion today has provided enough context to hopefully help you keep your head as you evaluate these deals. Unfortunately, that's all the time we have for today.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks to our producer, Kristi Waterworth, and the rest of The Motley Fool team. For Travis, Rachel, and myself, thank you so much for listening to our show, and we'll see you again tomorrow.

Wells Fargo is an advertising partner of Motley Fool Money. Jon Quast has no position in any of the stocks mentioned. Rachel Warren has positions in Apple. Travis Hoium has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Atlassian, Berkshire Hathaway, Chewy, and eBay. The Motley Fool has a disclosure policy.