E-bay rejected on tuesday game stop“The unsolicited bid is neither credible nor attractive,” he said of the company’s $56 billion takeover bid.
GameStop CEO Ryan Cohen announced a bold takeover offer for eBay last week, offering to buy the online marketplace for $125 a share in a cash and stock deal. eBay is much larger than the video game retailer, with a market cap of just over $48 billion, while GameStop’s market cap is about $10.3 billion.
“The board, with the assistance of independent advisors, has thoroughly considered your proposal and has decided to reject it,” Paul Pressler, chairman of eBay’s board of directors, said in the letter. “I have concluded that your proposal is neither reliable nor attractive.”
GameStop did not immediately respond to a request for comment.
EBay cited several concerns about the GameStop proposal, including “uncertainty regarding the proposed financing,” as well as operational risks and the debt burden that would result from the proposed transaction.
Cohen said GameStop plans to raise $20 billion in financing from TD Securities, part of TD Bank, and the company has about $9 billion in cash on hand, but the cash gap remains large.
A non-binding financing letter released by eBay on Tuesday said TD’s statement of confidence is contingent on the combined company maintaining an investment-grade credit profile from at least two of the top three rating agencies. CNBC previously reported that TD’s letter included that key condition.
Moody’s Ratings said last week that the proposed takeover would be “credit negative” for eBay because of the significant increase in leverage implied by the deal structure.
Many Wall Street analysts poured cold water on the deal, citing a lack of meaningful synergies between the two companies. Mr. Cohen also made an awkward and sometimes combative appearance on CNBC’s “Squawk Box,” offering few details about how he would finance the deal.
“We’re offering half cash, half stock, but we have the ability to issue stock to close the deal,” Cohen said. “But the details of the offer are on our website. Let’s see what happens.”
Cohen said he was prepared to take the offer directly to shareholders if eBay declined to get involved.
In his proposal, Cohen promised to run eBay “more efficiently,” including cutting headcount and cutting marketing spending, which he suggested under CEO Jamie Iannone had become bloated instead of leading to user growth.
He also said GameStop’s 1,600 U.S. retail stores could be used to authenticate and fulfill eBay orders and could serve as live commerce hubs.
In the letter, eBay said it continues to have confidence in its current management team and that its business has “delivered meaningful results” over the past few years.
“We have sharpened our strategic focus, strengthened our execution, enhanced our marketplace and seller experience, and continued to return capital to our shareholders,” eBay said in a statement.
The company’s stock price has risen 24% since the beginning of the year, and it is in the midst of a turnaround effort. Under Mr. Iannone, eBay has doubled down on so-called “focus categories” such as trading cards, collectibles and used luxury goods to differentiate itself from larger rivals such as: Amazon.
—CNBC’s Yun Li contributed reporting to this article.
