eBay rejects GameStop's buyout offer, says deal is 'not credible'

eBay's board of directors formally opposes GameStop's $56 billion share buyout proposal and shares major points of concern with the deal.

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A bit ago, GameStop made an offer to acquire eBay for $125 per share in a half-cash, half-stock deal worth around $56 billion. On the same day the proposal was announced, GameStop CEO Ryan Cohen went live with CNBC in a quizzical interview and was unable to answer exactly where the remaining buyout funds would come from--GameStop may be $15 billion short.

Fast-forwarding to today, and eBay has now rejected GameStop's offer. Paul Pressler, the chairman of eBay's board of directors, tells the GameStop CEO: "We have concluded that your proposal is neither credible nor attractive."

Pressler then goes on to bring up six major worry points that eBay has with the proposal:

"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."

Before the offer was made, eBay had quietly become one of the company's biggest shareholders, accumulating 5% of eBay's total stock worth around $2.4 - $2.8 billion.

It's believed that Cohen is prepared to make a hostile takeover attempt and bring the deal directly to shareholders. GameStop stock has dropped to $22.97 today following the announcement.

The joining of eBay and GameStop would effectively curb the second-hand games market under one singular entity, leaving only remnant stores on retailers like Amazon to compete. That aspect of the deal has not been brought into question, however, and it remains unclear how the retro games market could be affected should eBay and GameStop join forces.

In the later years, GameStop has survived through its push towards e-tail marketplace activity, shuttering dozens of physical brick and mortar stores in favor of direct-to-consumer purchases and shipping.