eBay Shuts Down GameStop’s $56 Billion Buyout Attempt - "Your Proposal Is Neither Credible Nor Attractive"
GameStop CEO Ryan Cohen took a massive swing when he made a move to acquire online marketplace giant eBay earlier this month, but the company has officially slammed the door on the proposal in spectacular fashion.
On May 3, GameStop submitted an unsolicited nonbinding offer to acquire eBay for $125 per share in a deal valued at roughly $55.5 billion. The proposed structure was reportedly split between 50% cash and 50% GameStop common stock, with TD Securities supposedly backing the move with a $20 billion debt financing commitment.
The problem? Almost nobody seemed convinced the deal could actually happen. Now eBay’s board of directors has made its position clear. In a statement released Tuesday, the company announced that after conducting “a thorough review,” it had rejected the proposal outright.
eBay chairman Paul Pressler was pretty harsh in his response. In a letter addressed directly to Cohen, he wrote: “We have concluded that your proposal is neither credible nor attractive.”
That’s about as direct as corporate rejection letters get.
According to eBay, the board examined several factors before turning the deal down, including “1) eBay’s standalone prospects, 2) the uncertainty regarding your financing proposal, 3) the impact of your proposal on eBay’s long-term growth and profitability, 4) the leverage, operational risks, and leadership structure of a combined entity, 5) the resulting implications of these factors on valuation, and 6) GameStop’s governance and executive incentives.”
In other words, eBay didn’t exactly love the idea of handing over the keys to GameStop. Pressler also emphasized that the company believes it’s in a strong position without outside interference, saying:
“With its differentiated global marketplace and a clear strategy, eBay’s Board is confident that the company, under its current management team, is well-positioned to continue to drive sustainable growth, execute with discipline, and deliver long-term value for our shareholders.”
The rejection comes after Cohen made a CNBC appearance last week that immediately raised eyebrows across Wall Street and social media. When pressed on how GameStop planned to finance a deal this massive, Cohen struggled to provide specifics.
“It’s on our website,” he said. “It’s half cash, half stock.” The awkward exchange quickly spread online, adding even more skepticism around the proposed takeover.
Investors clearly weren’t fully buying into the possibility either. Even after Cohen’s offer became public, eBay stock only climbed to $111.38 per share, still well short of the proposed $125 offer price. Shares closed Monday at $108.13, suggesting the market never truly believed the deal was heading toward the finish line.
The whole situation feels strange. GameStop, a company still trying to redefine itself after its meme-stock era explosion, attempted to absorb one of the biggest names in online commerce. Now eBay has responded with a corporate version of “absolutely not.”
At this point, it’ll be interesting to see whether Cohen tries to push forward with another move or if this ambitious takeover pitch ends up becoming one more bizarre chapter in GameStop’s already chaotic modern history.