eBay has turned down a $55.5 billion takeover proposal from video game retailer GameStop, describing the offer as unsolicited and lacking credibility.
Industry analysts had widely anticipated the rejection, citing concerns over the significant size difference between the two companies and uncertainty surrounding how the acquisition would be financed.
In a letter addressed to GameStop Chief Executive Ryan Cohen, eBay’s Board of Directors defended the company as a strong and resilient business with a recovery strategy already producing results despite increased competition from rivals such as Amazon, Etsy and Temu.
The board said it rejected the proposal after assessing concerns over eBay’s long-term growth prospects, operational risks, leadership structure and GameStop’s corporate governance.
GameStop, which became widely known during the “meme stock” trading frenzy driven by retail investors, is considerably smaller than eBay and currently operates about 1,600 stores globally, mainly in the United States.
The retailer had earlier stated that TD Securities had committed approximately $20 billion in debt financing to support the proposed acquisition.
Ryan Cohen argued that eBay could perform far better under his leadership and potentially become a stronger competitor to Amazon.
However, retail analyst Sucharita Kodali previously questioned the attractiveness of the offer, warning that the deal could burden eBay with significant debt obligations tied to GameStop.
Despite rejecting the bid, eBay may still face pressure if GameStop decides to take its proposal directly to shareholders, something Cohen has indicated remains an option.
Source: citinews
