GameStop shocked the financial world last week with a surprise $56 billion takeover bid to fold eBay into its portfolio. A few days have passed since the offer and eBay is ready to respond to the offer.
eBay Rejects GameStop’s $56 Billion Bid
GameStop’s attempt to buy eBay first went public earlier in May and it only took eBay about a week to come to a decision. During that week, the attempted takeover got a ton of coverage and attentional in the news. After deliberation at eBay, the answer is a clear no to GameStop’s offer.
According to Reuters, eBay chairman Paul Pressler explained that, “We have concluded that your proposal is neither credible nor attractive.”
This response doesn’t come as much of a surprise and aligns with most of the predictions about how the offer would be received by eBay’s leadership.
Part of the reason that the offer became such an interesting story in the financial sector is because of the difference in sizes of the two companies. eBay is valued at roughly four times as much as GameStop, so it was a bold play for the smaller company to attempt this sort of takeover bid.
GameStop is currently valued at around $12 billion and CEO Ryan Cohen explained on CNBC last week that the takeover bid, if it had been accepted, would be funded with a mix of cash and stock.
Cohen also explained that his plan was to combine GameStop and eBay with the goal of making a larger competitor for Amazon and supporting eBay’s marketplace business with GameStop’s physical stores in the U.S.
The desire for the takeover likely also connects to GameStop’s pivot to lean into the collectible market in recent years with a focus on things like collectible card gamers.
So far, the takeover attempt does not seem to be having a positive effect on GameStop’s growth. News of the bid actually led eBay stocks to climb, while GameStop stock began seeing more volatility in response to stakeholder concerns over the additional debt the takeover might lead the company to take on.
Although it is a tougher strategy to act out, Reuters did note that GameStop could theoretically still attempt a hostile takeover by taking the proposal directly to eBay shareholders through a special meeting.
Be sure to check back soon for more news and updates on the GameStop and eBay situation as the story develops.
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