EBay rejects $56bn GameStop bid as ‘neither credible nor attractive’
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Ebay has rejected video game retailer GameStop’s long-shot proposal to buy the online marketplace for $56bn, dismissing the unsolicited bid as “neither credible nor attractive”.
GameStop, which has a market value of $10.3bn, earlier this month unveiled a cash-and-stock offer to buy eBay — a company worth more than four times as much.
In a letter to GameStop chief executive Ryan Cohen published on Tuesday, eBay said the board had “thoroughly reviewed your proposal and has determined to reject it”, citing uncertainty over the deal’s financing, leverage and the operational risks of the combined group, as well as GameStop’s governance.
The rejection could spur GameStop to launch a hostile bid, as Cohen said last week he could take the takeover proposal directly to eBay shareholders. When announcing its offer, GameStop said it had built a 5 per cent stake in eBay.
GameStop’s bid valued eBay at $125 a share, offering to pay half in cash and half in stock to merge the companies. That represented a 46 per cent premium to eBay’s closing price on February 4 — the day GameStop began accumulating its position.
Cohen said in a letter to the eBay board that he believed a merger could cut costs and boost earnings. The bid was backed by a potential $20bn debt financing from Canada’s TD Bank.
EBay shares fell 1 per cent in premarket trading in New York on Tuesday. GameStop shares were down 4.6 per cent in premarket trading.
This is a developing story
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