eBay Dismisses GameStop’s $56B Acquisition Proposal as ‘Lacking Credibility’
eBay has officially dismissed GameStop’s bold $56 billion acquisition proposal, labelling the unsolicited offer as “neither credible nor attractive” in a letter addressed to GameStop CEO Ryan Cohen on Tuesday.
GameStop, boasting a market capitalization of approximately $10.3 billion, had proposed to acquire eBay—a company nearly five times its size valued at $48 billion—for $125 per share in a cash-and-stock deal. Cohen contended that GameStop’s 1,600 U.S. retail stores could function as authentication hubs and fulfillment centers for eBay’s marketplace operations.
In its rejection letter, eBay’s board chairman Paul Pressler expressed significant concerns including uncertainty surrounding GameStop’s financing proposal, which hinges on a contingent $20 billion debt commitment from TD Bank. This commitment necessitates the combined company to uphold an investment-grade rating, a prospect which ratings agency Moody’s has suggested would be unlikely, dubbing the deal as “credit-negative” for eBay.
The rejection paves the way for a potential hostile takeover attempt, as Cohen has previously demonstrated readiness to present the offer directly to eBay shareholders. Prominent investor Michael Burry liquidated his entire GameStop stake following the announcement, cautioning that the deal would burden the company with excessive debt.
Source: CNBC