EBay Spurns GameStop's Bid as 'Neither Credible nor Attractive'

"EBay rejected a $56 billion takeover offer from GameStop Chief Executive Officer Ryan Cohen, describing the unsolicited bid as "neither credible nor attractive." EBay's board turned down the offer after taking into account "uncertainty" around the financing plan, the operational risks involved and GameStop's governance, Chairman Paul Pressler said in a letter addressed to Cohen. Pressler also cited GameStop's executive incentives and a takeover's potential impact on eBay's long-term growth."

"The rejection sets the stage for a potential proxy fight to replace eBay's board with one favorable to a deal. Cohen had previously said that he's prepared to take his plan straight to shareholders should the board turn down his offer. Cohen last week offered $125 a share - consisting of 50 percent cash and 50 percent GameStop stock - to eBay shareholders. That was a 20 percent premium to the stock price the previous Friday's close."

"Cohen's plan has been received by investors with skepticism. GameStop's market value is about $10 billion, less than a fourth of the value of eBay. The company has said it plans to borrow $20 billion to help finance the acquisition. Cohen pledged to find $2 billion in cost savings within 12 months of the deal closing and suggested that eBay CEO Jamie Iannone's spending on marketing has been wasteful."

"In January, GameStop unveiled a compensation package for Cohen that would reward him with options on more than 171 million shares if he lifted GameStop's market value to $100 billion. Cohen has said he would take over a combined entity but get paid solely based on the performance of that company. EBay's online marketplace has 136 million users who spend about $80 billion a year on the platform."

eBay rejected an unsolicited $56 billion takeover offer from GameStop CEO Ryan Cohen. The board declined the bid after considering uncertainty in the financing plan, operational risks, and GameStop governance. eBay also cited GameStop executive incentives and the potential impact of a takeover on eBay’s long-term growth. The rejection may lead to a proxy fight aimed at replacing eBay’s board with directors favorable to a deal. Cohen offered $125 per share, split evenly between cash and GameStop stock, representing a 20% premium. Investors viewed the plan skeptically because GameStop’s market value is far smaller than eBay’s and financing would involve borrowing $20 billion, alongside pledged cost savings and criticism of eBay’s marketing spending.

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