eBay rejects GameStop's $56 billion takeover bid
eBay's board rejected GameStop CEO Ryan Cohen's unsolicited $56 billion acquisition offer, citing financing uncertainty and operational risks.
1:07 PM
eBay on Tuesday rejected GameStop's $56 billion takeover proposal, calling the unsolicited bid "neither credible nor attractive."
GameStop CEO Ryan Cohen unveiled the offer last week, proposing to acquire eBay for $125 per share in a cash-and-stock deal. The bid valued the online marketplace at approximately $55.5 billion to $56 billion.
In a letter to Cohen, eBay's board chair Paul Pressler stated the company had "reviewed exhaustively" the proposal with support from independent advisors and determined to reject it. The board concluded the offer was "neither credible nor attractive" after considering eBay's prospects as an independent company, uncertainty surrounding the acquisition's financing, potential impact on eBay's long-term growth and profitability, leverage, operational risks, and the resulting leadership structure.
The size disparity between the two companies underscored the audacity of the bid. eBay has a market capitalization of just over $48 billion, while GameStop's is approximately $10.3 billion to $10.4 billion. eBay is considerably larger than the video game retailer.
GameStop, which already owns a 5 percent stake in eBay, argued that its approximately 1,600 retail locations would provide eBay with a "national network" for authentication, intake, and fulfillment operations.
eBay emphasized in its rejection that it had confidence in its ability to generate sustainable growth and value as an independent company. The board noted the company's turnaround efforts, which it said had driven growth. eBay acknowledged it had faced competition from online sellers including Amazon, Etsy, and Temu in recent years.
Analysts and investors had widely questioned the deal's viability prior to the rejection. Concerns centered on how GameStop would finance such a large transaction and the strategic rationale for the acquisition. Many observers had expected eBay's board to reject the proposal given the financing uncertainties and operational complexities involved in combining the two companies.
GameStop did not immediately respond to requests for comment following the rejection. Ryan Cohen had previously stated his willingness to present the offer directly to eBay shareholders if the board rejected it, potentially opening the door to a hostile takeover attempt, though no such move has been announced.