eBay has dismissed a $56 billion takeover proposal from GameStop, saying the offer raised material doubts about how the transaction would be financed and declaring it was not credible or attractive.
In a direct response to GameStop’s bid, eBay wrote to Ryan Cohen that "We have concluded that your proposal is neither credible nor attractive." The language from the eBay board underscores skepticism over an audacious approach from a suitor described as roughly one-quarter the size of the company it seeks to buy.
The refusal increases the likelihood that the situation could move beyond negotiation and toward a hostile campaign. GameStop Chief Executive Ryan Cohen stated last week that he was prepared to present the proposal directly to eBay shareholders if the board declined to engage in discussions.
Investors showed immediate caution. eBay shares were trading around $107 per share in premarket activity, down about 1.1%, and below the $125 per share price that GameStop has proposed. That price differential reflects investor doubts about whether the proposed transaction can be completed on the terms outlined.
Under the terms disclosed, the proposed transaction would be funded with a roughly equal mix of cash and stock. That structure has drawn skepticism from analysts and some investors, who question whether GameStop - the videogame retailer valued at roughly $12 billion - can credibly finance a purchase approaching four times its market capitalization.
Cohen has pointed to what he describes as about $20 billion in potential debt financing from TD Securities, coupled with GameStop’s capacity to issue new shares, as the mechanisms to fund the deal. Those financing claims have not persuaded eBay’s board, which remains unconvinced of the overall credibility or attractiveness of the proposal.
The bid has also unsettled some investors on GameStop’s side. Notably, Michael Burry, the investor publicly known for his past market actions, sold his entire stake in GameStop following the bid announcement. Burry criticized the proposal as "pedestrian" and flagged concerns about the amount of debt the transaction would require as well as potential dilution for shareholders.
With the public rebuff now on the record, the next steps could include an escalation by GameStop toward a shareholder-focused strategy. For now, both the financing plan and the willingness of key stakeholders to back such a large, leveraged transaction remain open questions.
Sections:
- Deal status: eBay formally rejected the $56 billion offer from GameStop.
- Financing concerns: eBay cited doubts about how the proposed transaction would be financed.
- Next moves: GameStop’s CEO signaled readiness to take the bid to eBay shareholders if the board will not engage.