eBay Rejects GameStop’s Unlikely $56 Billion Bid

eBay has formally rejected GameStop’s $56bn takeover proposal, dismissing the offer as financially shaky and strategically unconvincing.

In a sharply worded statement on Tuesday, eBay Chairman Paul Pressler said the board had little interest in pursuing a deal.

“We have concluded that your proposal is neither credible nor attractive,” Pressler said. “eBay’s Board is confident the company, under its current management team, is well-positioned to continue to drive sustainable growth.”

The response amounts to a public rebuke of an audacious bid from a company worth only about a quarter of eBay’s market value.

The offer was unveiled last week by GameStop CEO Ryan Cohen, the billionaire entrepreneur best known for cofounding Chewy and for becoming a central figure in GameStop’s dramatic 2021 meme-stock rally.

Cohen proposed a half-cash, half-stock deal and said he had secured a $20bn debt commitment from TD Bank. But that financing was contingent on the combined company receiving an investment-grade credit rating — a condition many analysts view as unrealistic.

Moody’s said last week that the proposed acquisition would be credit negative for eBay, reinforcing doubts that lenders would support the transaction on the terms Cohen described.

Those concerns were central to eBay’s rejection. The company said the proposal raised serious questions about financing, the governance structure of a merged company, and the potential impact on eBay’s long-term growth strategy.

The market had already signaled skepticism. eBay shares traded well below the implied offer price of $125 per share and slipped 1.3 percent on Tuesday to $106.68. GameStop shares were down nearly 2 percent in early trading.

The disconnect reflects a broader view on Wall Street that the bid was more provocative than practical.

Cohen has argued that combining the two companies would unlock cost savings and create a stronger competitor to Amazon. He suggested that GameStop’s 600 US stores could provide a physical footprint to support eBay’s online marketplace.

But the businesses operate very differently. eBay serves as a platform connecting buyers and sellers and earns transaction fees without carrying inventory. GameStop still relies on a traditional retail model, purchasing products wholesale and reselling them through stores.

The profitability gap is also significant. Analysts note that eBay already generates an EBITDA margin of about 31 percent, roughly three times GameStop’s 10 percent. That leaves limited room for the kind of operational overhaul Cohen says he could deliver.

Cohen, who owns a 5 percent stake in eBay, has indicated he may try to take his case directly to shareholders, potentially by seeking a special meeting. But doing so would likely require a larger ownership position and substantial investor support.

The bid has also unsettled some GameStop shareholders, who worry that taking on tens of billions in debt and issuing new stock could dilute the company’s value.

Among the skeptics is Michael Burry, the investor made famous by The Big Short. Burry reportedly sold his GameStop stake after the offer was announced, warning that the transaction would burden the company with excessive leverage.