eBay’s board rejected GameStop’s unsolicited takeover bid, saying the proposal lacked credible financing and carried major operational and debt risks.
eBay rejected GameStop’s unsolicited takeover proposal on Tuesday, saying the cash-and-stock offer was not compelling and raised serious questions about financing, debt and execution.
The bid was priced at $125 a share. CBS News described the proposal as worth $55.5 billion, while CNBC rounded the value to $56 billion. The offer would have paired a large online marketplace with a much smaller video game retailer that became one of the best-known meme stocks during the 2021 retail trading surge.
In a letter cited by CNBC, eBay board Chairman Paul Pressler said the board had reviewed the proposal with independent advisers and decided to reject it. “We have concluded that your proposal is neither credible nor attractive,” he wrote.
GameStop CEO Ryan Cohen unveiled the proposal last week, arguing that GameStop’s roughly 1,600 U.S. stores could help eBay build a network for authentication, intake and fulfillment. The company already owns a 5% stake in eBay, CBS News reported.
eBay said its concerns included uncertainty around GameStop’s financing plan, the leverage that would come with the deal and operational risks from combining the two companies. CNBC reported that Cohen said GameStop had about $9 billion in cash and a $20 billion financing commitment from TD Securities, but that the financing letter was not binding and depended on the combined company maintaining an investment-grade credit profile from at least two of the three major ratings agencies.
The size gap between the companies has been central to the skepticism around the bid. CNBC put eBay’s market capitalization at just over $48 billion and GameStop’s at roughly $10.3 billion; CBS News reported similar figures, with eBay around $48 billion and GameStop about $10.4 billion at the time of the rejection.
Analysts had questioned both the financing and strategic rationale for the deal. Moody’s Ratings said last week the proposed acquisition would be “credit negative” for eBay because of the increased leverage implied by the structure, CNBC reported.
GameStop did not immediately respond to requests for comment cited by CNBC and CBS News. Cohen had previously said he was prepared to take the offer directly to eBay shareholders if the company declined to engage, leaving open whether GameStop will try to continue the pursuit after the board’s rejection.
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