Grapevine-based GameStop’s $55.5B bid for eBay was just rejected, here are the reasons why.
GRAPEVINE, Texas — eBay has officially rejected an unsolicited, non-binding proposal from Grapevine-based GameStop to acquire the e-commerce giant in a deal valued at approximately $55.5 billion.
In a response letter released Tuesday, eBay’s Board of Directors stated that after a thorough review with financial and legal advisors, they determined the proposal was “neither credible nor attractive.”
The offer from GameStop, which is headquartered in Grapevine, consisted of $125 per share in a half-cash, half-stock transaction. GameStop CEO Ryan Cohen, who would have served as CEO of the merged entity, argued that eBay was “under-earning” and could see doubled earnings by cutting costs in marketing and operations. Cohen proposed combining eBay’s online operation with GameStop’s brick-and-mortar stores to allow it to compete with online retail giants, like Amazon, Walmart, and others.
However, the San Jose-based marketplace cited major concerns regarding the North Texas retailer’s bid. With GameStop valued at about $10.4 billion compared to eBay’s $48 billion market value, questions immediately arose regarding how the smaller retailer would fund such a massive takeover. In its formal rejection, eBay’s board noted it took into account “the uncertainty regarding your financing proposal.”
“With its differentiated global marketplace and a clear strategy, eBay’s Board is confident that the company… is well-positioned to continue to drive sustainable growth,” stated Paul S. Pressler, Chairman of eBay’s Board of Directors.
The move represents a bold attempt by the local gaming retailer to pivot its business model. GameStop had hoped to use its remaining 1,600 U.S. stores as a “core component” of a new logistics and authentication strategy for eBay.
The rejection comes as GameStop continues to navigate a changing retail landscape. While the company shuttered hundreds of stores last year—including its location at Grapevine Mills mall—it recently indicated it does not “anticipate closing a significant number of stores” in the coming year.
For now, eBay advises its shareholders to take no action, maintaining that its standalone prospects remain the best path forward for the company.