EBay Rejects $56 Billion GameStop Takeover Offer

The eBay rejected this Tuesday (12) an ambitious offer to acquire US$56 billion made by GameStopa much smaller company, due to doubts over financing the business, while also highlighting its turnaround efforts that have driven the group’s growth.

Analysts and investors doubted that the offer, half in cash and half in actionsfrom the $12 billion video game retailer to a company nearly four times its market value was shut down.

eBay shares have been trading well below the offering price of $125 per share since the offer was made earlier this month. The shares fell 1.1%, to US$ 107 in pre-market, while GameStop lost almost 4%.

“We conclude that your proposal is neither credible nor attractive,” said eBay President Paul Pressler. “eBay’s board of directors is confident that the company, under its current management team, is well positioned to continue to drive sustainable growth.”

GameStop did not immediately respond to a request for comment.

GameStop Hostile Bid

The rejection could lead to a hostile bid, as GameStop Chief Executive Ryan Cohen had said he was willing to take the bid directly to eBay shareholders, possibly calling a special meeting.

Cohen argued that by combining GameStop and eBay, he could cut costs and find synergies to create a much larger company.

He said he could increase eBay’s profitability by replicating GameStop’s cost-cutting initiative and use its 600 U.S. stores in a brick-and-mortar network to help turn eBay into a stronger rival to Amazon.

The offer angered some GameStop investors. Michael Burry, of “The Big Short” fame, sold his stake in the company after the offering, warning that it would saddle GameStop with debt and dilute shareholders.

Both eBay and GameStop sell collectibles like trading cards, but their core businesses are different. While eBay charges fees connecting online buyers and sellers without holding inventory, GameStop buys products wholesale and resells them in physical stores.