EBay Rejects GameStop’s $56 Billion Takeover Bid: ‘Your Proposal Is Neither Credible nor Attractive’
by Todd Spangler · VarietyOnline retailing giant eBay has turned down GameStop CEO Ryan Cohen’s unsolicited $56 billion takeover proposal, calling it “neither credible nor attractive.”
On May 3, GameStop submitted a nonbinding offer to acquire of eBay for $125/share (supposedly comprising 50% cash and 50% GameStop common stock), valuing eBay at $55.5 billion. But questions immediately arose about how GameStop could swing the deal, even with a $20 billion debt financing commitment from TD Securities.
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On Tuesday (May 12), eBay announced that “following a thorough review,” its board of directors determined to reject GameStop’s proposal.
“We have concluded that your proposal is neither credible nor attractive,” eBay chairman Paul Pressler said in a letter addressed to Cohen, included in its press release.
The board of eBay took 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.”
Pressler added that “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.”
Cohen, in an appearance on CNBC last week, was unable to answer questions about how he planned to finance the deal — and the awkward exchange went viral. “It’s on our website,” he said. “It’s half cash, half stock.”
EBay investors were already highly skeptical of the proposed GameStop deal going anywhere. Shares of eBay peaked at $111.38/share after Cohen’s offer, well below his proposed $125/share offer, and closed Monday at $108.13.