EBay on Tuesday rejected GameStop‘s $56 billion takeover proposal, calling the unsolicited bid “neither credible nor attractive.”
GameStop CEO Ryan Cohen last week unveiled an audacious bid for eBay, offering to acquire the online marketplace for $125 per share in a cash-and-stock deal. EBay is much larger than the video game retailer, with a market cap of just over $48 billion, while GameStop’s is roughly $10.3 billion.
“The Board, with the support of its independent advisors, has thoroughly reviewed your proposal and has determined to reject it,” Paul Pressler, the chairman of eBay’s board, wrote in a letter. “We have concluded that your proposal is neither credible nor attractive.”
GameStop didn’t immediately respond to a request for comment.
EBay listed several concerns with GameStop’s offer, including “the uncertainty regarding your financing proposal,” along with operational risks and the debt load that would result from the proposed transaction.
Cohen said GameStop had lined up a $20 billion financing commitment from TD Securities, part of TD Bank, and the company has about $9 billion in cash on hand, but the funding gap remains substantial.
Many Wall Street analysts threw cold water on the deal, citing a lack of meaningful synergies between the two companies. Cohen also made an awkward and at times combative appearance on CNBC’s “Squawk Box,” where he offered few details on how he would finance the deal.
“We are offering half cash, half stock, and we have the ability to issue stock in order to get the deal done,” Cohen said. “But the full details of the offer are on our website. We’ll see what happens.”
Cohen pledged to operate eBay “a lot more efficiently,” including trimming headcount and slashing its marketing spend, which he suggested had become bloated under CEO Jamie Iannone without leading to user growth.
He also said GameStop’s 1,600 U.S. retail stores could be used to authenticate and fulfill eBay orders, as well as serve as hubs for live commerce.
