Ebay’s board firmly rejected GameStop CEO Ryan Cohen’s $56 billion offer to buy the company on Tuesday, stating that the bombshell proposal is “neither credible nor attractive.”
Cohen shocked Wall Street last week with the unsolicited takeover bid, in which GameStop offered to buy eBay for $125 per share in cash and stock. The offer drew immediate skepticism from investors – in part because eBay is nearly five times larger than GameStop by market cap.
“The Board, with the support of its independent advisors, has thoroughly reviewed your proposal and has determined to reject it,” eBay chairman Paul Pressler said in a letter to Cohen. “We have concluded that your proposal is neither credible nor attractive.”
Pressler noted that “the uncertainty regarding your financing proposal” was a key factor in the board’s determination, as was “eBay’s standalone prospects” and the board’s confidence in its current leadership.
GameStop shares were down 2% in Tuesday trading after the letter surfaced. Ebay shares were flat and trading at about $108 per share, well below the $125 price included in GameStop’s offer.
Upon disclosing his offer last week, Cohen said that GameStop had already quietly built a 5% ownership stake in eBay and had secured a commitment for up to $20 billion in debt financing from TD Securities.
However, uncertainly persisted about how Cohen would pay for the rest of the deal, especially after a combative appearance on CNBC last week in which the billionaire repeatedly dodged questions from the network’s anchors about the specifics.
“We are offering half cash, half stock, and we have the ability to issue stock in order to get the deal done,” Cohen said at the time. “But the full details of the offer are on our website. We’ll see what happens.”
Wall Street analysts, including analysts at Bernstein and Bloomberg Intelligence, expressed doubt that the deal would move forward.
EBay has recently been on the upswing, with success driven by a renewed focus on collectibles. The company’s stock is up nearly 25% since the start of the year.
