eBay has officially rejected GameStop’s massive $56 billion takeover proposal, calling the offer “neither credible nor attractive” as tensions continue escalating between the two companies.
The rejection comes after GameStop, led by CEO Ryan Cohen, announced plans earlier this month to acquire eBay in what would have been one of the largest retail and e-commerce deals in recent years. GameStop’s proposal reportedly valued eBay at roughly $125 per share through a combination of cash and GameStop stock.
In a letter sent to Cohen, eBay Chairman Paul Pressler said the company’s board carefully reviewed the proposal before unanimously deciding to reject it. Pressler wrote that eBay’s leadership believes the company is already positioned for continued long-term growth under its current management team.
According to eBay, several major concerns led to the rejection. The company questioned how GameStop planned to finance such a large acquisition, especially considering eBay’s market value is several times larger than GameStop’s. Executives also raised concerns about the potential debt burden, operational risks, governance structure, executive compensation plans, and the possible impact a merger could have on eBay’s long-term profitability and growth.
GameStop’s proposal had already drawn skepticism from Wall Street analysts and investors shortly after it became public. Critics questioned how the struggling video game retailer would realistically secure enough financing to complete a $55 billion to $56 billion acquisition. Reports indicated GameStop had received a commitment letter from TD Bank for up to $20 billion in debt financing, but analysts noted the company still lacked a clear explanation for how the remainder of the deal would be funded.
Cohen argued that acquiring eBay could help transform GameStop into a legitimate competitor to Amazon. He proposed using GameStop’s roughly 1,600 U.S. stores as fulfillment centers, authentication hubs, shipping locations, and even livestream broadcasting studios to support eBay product sales and collectibles commerce.
The proposed merger focused heavily on overlap between the two companies in collectibles, retro gaming, trading cards, and resale markets. Cohen also claimed the combined company could reduce annual costs by as much as $2 billion through cuts to marketing expenses, corporate overhead, and product development spending.
Despite those arguments, eBay said the company has already undergone a successful turnaround in recent years. Pressler highlighted that eBay’s stock has increased substantially under CEO Jamie Iannone and said the marketplace has improved its seller experience, strengthened execution, sharpened its strategic focus, and consistently returned value to shareholders.
eBay executives also emphasized that the company remains financially strong and resilient while continuing to compete against major online retail rivals including Amazon, Walmart, Shein, and Facebook Marketplace.
The unusual takeover attempt has attracted widespread attention online because of GameStop’s history as one of the original “meme stocks” during the 2021 short squeeze phenomenon fueled largely by Reddit traders. Although GameStop has recently attempted to pivot toward collectibles and retro gaming, the company has also closed hundreds of stores in an effort to reduce costs.
Meanwhile, eBay currently has roughly 136 million active users worldwide and generates billions of dollars annually through marketplace commissions, advertising, and payment processing services.
The situation became even more bizarre after Cohen publicly posted online that he was selling merchandise on eBay “to pay for eBay.” Reports later surfaced that his eBay account had been suspended. Among the items reportedly listed were expensive GameStop-branded products including hats and mugs priced in the thousands of dollars.
Some prominent investors also distanced themselves from the proposal. Investor Michael Burry reportedly sold all of his GameStop shares and criticized the company’s reliance on debt financing, writing online, “Never confuse debt for creativity.”
Despite eBay’s rejection, Cohen has previously indicated he may continue pursuing the acquisition by appealing directly to eBay shareholders or launching a proxy fight aimed at replacing members of eBay’s board with directors who would support the merger. Analysts, however, say the chances of the takeover succeeding currently appear very low.
Following news of the rejection, GameStop shares fell in premarket trading while eBay’s stock remained relatively stable.
Source: ABC15 Arizona
