GameStop’s $55.5bn bid for eBay rejected as ‘neither credible nor attractive’

The board of eBay has rejected the US video games retailer GameStop’s surprise $55.5bn bid (£41bn) for the online marketplace, describing the proposal as “neither credible nor attractive”.

Earlier this month, GameStop made an unsolicited bid for eBay, publishing a letter on its website outlining a half-cash, half-stock proposal.

This was despite the US games company – which became a global household name during the meme stock craze of 2021 – being worth far less than its takeover target. GameStop had a market valuation of roughly $12bn before its bid, almost a quarter of eBay’s $46bn valuation.

GameStop’s shares have fallen by more than 12% since releasing its takeover offer, particularly after the company’s chief executive, Ryan Cohen, failed to explain how the retailer could afford the deal during a television interview on CNBC.

In a letter to Cohen published on Tuesday, eBay’s chair, Paul Pressler, said its board and advisers had reviewed GameStop’s proposal and “determined to reject it”.

Pressler said eBay had taken into account uncertainty around GameStop’s financing proposal as well as its borrowing and the operational risks of a combined group.

Cohen has previously said GameStop was prepared to launch a hostile bid and take the offer directly to eBay’s shareholders if the board was not receptive to his proposal.

GameStop has built up a stake of 5% in eBay and is offering to acquire the company at $125 a share, using about $9.4bn in “cash on hand” and $20bn in potential debt financing from TD Securities. Adding GameStop’s market capitalisation of just over $10bn, the total remains about $16bn short of what it offered in its unsolicited bid.

During the CNBC interview, Cohen dodged questions over how the company would make up the funds needed to close the deal, saying he did not “understand the question”.

Cohen, who has been involved with GameStop since 2020, has said the online marketplace could be worth much more under his leadership, vowing to launch an immediate cost-cutting plan and turn it into what he describes as a “legit competitor to Amazon”.