Topline
Ebay on Tuesday rejected Gamestop’s $56 billion bid to takeover the company, questioning the financial viability of the deal, weeks after the video game retailer and popular memestock made an unsolicited bid to take over the online marketplace with a four-times larger market cap.
Ebay rejected GameStop’s unsolicited $56 billion bid.
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Key Facts
In a press release, eBay shared a letter it sent to GameStop CEO and billionaire Ryan Cohen noting that its board had reviewed the deal and rejected it.
The board concluded that the proposal put forth by Cohen’s company was “neither credible nor attractive,” the letter said.
It then highlights potential issues with the deal including “uncertainty” around the “financing proposal” and the “leverage, operational risks, and leadership structure” of the combined entity.
Cohen had previously suggested that GameStop may issue more stock to help fund a part of its half-cash, half-stock bid to take over eBay and TD Bank would provide up to $20 billion in debt financing.
How Has The Market Reacted?
GameStop’s shares fell 4.14% in premarket trading early on Tuesday. The drop started overnight after a volatile trading day where the stock jumped more than 13% after popular memestock influencer Keith Gill also known as “Roaring Kitty” made a series of cryptic posts on X. The now-deleted posts appeared to be a meme coin but its unclear why they were deleted.
Key Background
The unsolicited bid was announced earlier this month, with GameStop saying it would pay $125 per share to acquire eBay in a half-stock, half-cash deal. While announcing the offer, GameStop disclosed it had gained a 5% stake in the company through stock purchases. At the time Cohen told the Wall Street Journal that he believes that eBay should be worth a “lot more money” and under him it could become a “legit competitor to Amazon.” After receiving the bid, eBay said it had received no prior discussions with or outreach from GameStop. The offer, however, was met with skepticism from Wall Street, with Morgan Stanley analysts saying in a note that the broader market would be “skeptical of a potential deal’s feasibility.”
What To Watch For
After going public with the offer, Cohen had told the Journal that if the company dismisses his offer, he is prepared for a proxy battle and will take his offer directly to the e-commerce company’s shareholders. The billionaire has also taken shots at eBay on social media, and claimed that the platform banned his account after he listed several personal items, including socks, for sale to fund the buyout in an apparent online stunt.