The bizarre saga of GameStop's $56 billion bid to acquire eBay has come to, if not an ending, then at least a sudden break: the internet auction empire today rejected GameStop's offer, declaring "We have concluded that your proposal is neither credible nor attractive" in a letter from eBay board chairman Paul Pressler.
"The Board, with the support of its independent advisors, has thoroughly reviewed your proposal and has determined to reject it," wrote eBay.
"We have taken into account such factors as 1) eBay's standalone prospects, 2) the uncertainty regarding your financing proposal, 3) the impact of your proposal on eBay's long-term growth and profitability, 4) the leverage, operational risks, and leadership structure of a combined entity, 5) the resulting implications of these factors on valuation, and 6) GameStop's governance and executive incentives".
In some fairness to GameStop CEO Ryan Cohen—who has been touting the offer with characteristic swagger on all channels since he first made it on May 3—the games retailer did turn over its first operating profit since 2018 last year.
Nevertheless, the bid has never seemed like anything other than fantasy. GameStop is almost a quarter the size of eBay by market cap: it's valued at $12 billion versus eBay's $46 billion, and when pressed as to where the money would come from in televised interviews, Cohen was surreally schtum.
On paper, the terms of the deal were that Cohen would offer eBay shareholders $28 billion in cash with the aid of TD Bank, which would provide $20 billion of that number. GameStop would also have issued a billion new shares that would give eBay's current shareholders a 70% stake in the proposed GameStop-eBay combo entity.
All of which is now, at least for the moment, by the by, as eBay has shot down Cohen and his wild-eyed notions. "eBay is a strong, resilient business that has delivered meaningful results over the past several years. We have sharpened our strategic focus, strengthened execution, enhanced our marketplace and seller experience, and consistently returned capital to shareholders," continues the letter from eBay's board.
"With its differentiated global marketplace and a clear strategy, eBay's Board is confident that the company, under its current management team, is well-positioned to continue to drive sustainable growth, execute with discipline, and deliver long-term value for our shareholders.
"Our team remains focused on executing our strategy and driving our business forward in the best interests of the company, our shareholders, our employees, and millions of buyers and sellers around the world."
For his part, Cohen told the Financial Times that "The more [eBay] fights me, the more… I'm not going to take no for an answer. I'm not going away. I'm a pain in the ass."
