eBay Rejects GameStop Acquisition Bid
The bid was "neither credible nor attractive," says eBay
Online auction giant eBay has rejected a takeover bid from video game retailer GameStop, with the eBay Board of Directors calling the $56 billion unsolicited bid “neither credible nor attractive.”
Ryan Cohen, the CEO of GameStop and architect of the bid, previously stated that he would take his appeal directly to shareholders if eBay’s board rejected his overtures.
Cohen had pitched a partnership with eBay that he said would cut down on wait times and shipping costs for high-end collectables to be graded and authenticated before going to eBay’s marketplace. He said he wanted to transform eBay into a “legit competitor with Amazon.”
The deal would have left the combined entity heavily leveraged, since the cost to acquire eBay would be several times GameStop’s current market capitalization. That was reportedly one of the factors that contributed to eBay’s decision.
“We have concluded that your proposal is neither credible nor attractive,” eBay wrote in an open letter to Cohen. “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.”
Cohen is an activist investor known for making aggressive plays. In 2022, attempted to acquire Bed, Bath & Beyond. His plan was reportedly to spin off Buy Buy Baby as a stand-alone eCommerce site, but instead he butted heads with the Bed Bath board and divested himself of his nearly 11% of company stock. The company declared bankruptcy in April 2023.
Cohen was part of the GameStop short squeeze in 2021, which briefly pushed the company’s share price as high as $483. It’s currently sitting at a little under $25, more in line with its historical value but still a fairly high valuation given the company’s assets.
A number of Cohen’s attempts to diversify GameStop’s operations have stalled out, including an NFT marketplace and a number of regional fulfillment centers. Currently, GameStop is in the process of closing nearly 500 of its retail locations.
Cohen’s vision of a massive online marketplace to rival Amazon is at the heart of some conspiracy theories tied to his play for Bed Bath & Beyond. You can see more on that in Dan Olson’s terrific documentary This is Financial Advice:
