eBay rejects acquisition proposal from GameStop (GME)

GameStop CEO Ryan Cohen's unsolicited proposal to acquire eBay has been rejected by the company deeming it 'neither credible nor attractive.'

Ecommerce auction platform eBay has rejected GameStop's proposed acquisition. The ham-fisted $56 billion deal was announced by the video game retailer last week, and was met with scrutiny from Wall Street.

Here's a statement from eBay:

eBay Inc. (Nasdaq: EBAY), a global commerce leader that connects millions of buyers and sellers around the world, today announced that, following a thorough review with the support of its financial and legal advisors, the company's Board of Directors has determined to reject GameStop's unsolicited, non-binding acquisition proposal.

The full text of the eBay Board's response letter to GameStop CEO, Ryan Cohen, is set forth below:

Dear Mr. Cohen,
The Board, with the support of its independent advisors, has thoroughly reviewed your proposal and has determined to reject it.
We have concluded that your proposal is neither credible nor attractive. We have taken into account such factors as 1) eBay's standalone prospects, 2) the uncertainty regarding your financing proposal, 3) the impact of your proposal on eBay's long-term growth and profitability, 4) the leverage, operational risks, and leadership structure of a combined entity, 5) the resulting implications of these factors on valuation, and 6) GameStop's governance and executive incentives.
eBay is a strong, resilient business that has delivered meaningful results over the past several years. We have sharpened our strategic focus, strengthened execution, enhanced our marketplace and seller experience, and consistently returned capital to shareholders. With its differentiated global marketplace and a clear strategy, eBay's Board is confident that the company, under its current management team, is well-positioned to continue to drive sustainable growth, execute with discipline, and deliver long-term value for our shareholders.
Our team remains focused on executing our strategy and driving our business forward in the best interests of the company, our shareholders, our employees, and millions of buyers and sellers around the world.
Sincerely,
/s/ Paul S. Pressler
Paul S. Pressler
Chairman of the Board of Directors, eBay

This saga began just a week ago when GameStop CEO Ryan Cohen went on CNBC to detail a $56 billion proposal to acquire eBay. He disclosed that the video game retailer had accumulated a 5% stake in the company comprised many of stock options and that the deal would be half stock and half cash.

GameStop (GME) shares are trading about 4% lower in the premarket session, while eBay shares are down less than a percent. The deal would have valued eBay at $125/share, and the stock currently sits at $107.50/share at the time this article went live.

The deal did appear to be heading South when Cohen began lashing out on social media at eBay's board of directors. He even claimed to have been banned from the platform after listing a ton of items for auction to help fund the acquisition.

GameStop's CEO has previously stated that he may take this offer directly to eBay shareholders, so we will have to wait and see where this story is headed before declaring the deal deader than Blockbuster Video.

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Full Disclosure:

At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:

Long GameStop via GME shares

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