eBay coldly rejects GameStop: “Neither credible nor attractive”

eBay has firmly rejected the unsolicited takeover bid from video game retailer GameStop. The board of the American auction site calls the $55.5 billion (€51.5 billion) offer “neither credible nor attractive.”

Remarkable imbalance

The takeover proposal was remarkable due to the imbalance between the two companies. GameStop, known for its brick-and-mortar game stores, had a market capitalization of nearly $12 billion (€11.1 billion) at the time of the offer. That is nearly four times less than the value of eBay, which operates globally in online auctions and e-commerce.

eBay CEO Paul Pressler stated in a letter to GameStop that the offer had been thoroughly reviewed. “We have concluded that your proposal is neither credible nor attractive,” Pressler wrote verbatim.

Financial concerns and leadership questions

eBay raised several concerns about the acquisition plan. GameStop, which was in deep financial trouble just a few years ago, would have to raise half of the acquisition amount by issuing new shares. A bank would guarantee a $20 billion loan. eBay has serious doubts that this financing will materialize and calls it “highly uncertain.”

In addition, eBay has reservations about GameStop’s corporate structure and leadership. The game retailer has been led for several years by Canadian venture capitalist Ryan Cohen. Cohen sees synergies between GameStop’s physical stores and eBay’s logistical challenges, such as the delivery and return of items. eBay does not share that vision: Pressler emphasizes in his letter that eBay would prefer to remain independent in order to grow and innovate more quickly.

A turbulent history

GameStop made headlines worldwide in 2021 as a “meme stock,” a peculiar stock market phenomenon: a group of retail investors, united via the online forum Reddit, drove GameStop’s stock price to unprecedented heights. This led to significant losses for several hedge funds that had bet on a price drop. Nearly 30,000 Dutch people joined the hype, often with mixed results.

eBay’s rejection marks a new chapter in GameStop’s turbulent history. Whether the company will come up with a revised offer remains unclear at this time. For now, eBay seems determined to chart its own course.