GameStop’s $56 billion bid for eBay has been rejected by the online marketplace, who called the proposal “neither credible nor attractive”.
This brings a temporary end to a striking attempt by GameStop boss Ryan Cohen to turn the video game retailer into a bigger player in e-commerce.
GameStop wanted to pay around $125 per eBay share, partly in cash and partly in stock. That offer was about 20% above eBay’s market price. Even so, many analysts did not believe the bid was realistic, mainly because GameStop itself is much smaller than eBay. GameStop’s market value is around $12 billion, while eBay is worth almost four times as much.
In a letter to GameStop, eBay chair Paul Pressler said the board maintains confidence in the current strategy and management. According to eBay, the company is on track to continue growing independently.
Cohen had earlier said he was prepared to go directly to eBay’s shareholders if the board refused to cooperate. He said a combination of GameStop and eBay could cut costs and become a stronger rival to Amazon. He pointed, among other things, to GameStop’s physical shops, which could be used for logistics and distribution.
Serious doubts remain, however, about the financing of the plan. Cohen claimed there was a letter of intent for around $20 billion in debt financing via TD Securities, but in interviews he gave little concrete explanation of how the full takeover would be paid for. That led to scepticism on Wall Street and among some GameStop shareholders.
Well-known investor Michael Burry is also said to have sold his stake in GameStop over concerns about rising debts and share dilution.
The market reacted negatively to the news. Shares in both eBay and GameStop fell in pre-market trading after the rejection was announced.
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