eBay rejects $56 billion takeover offer of GameStop
In a note, the San Jose, California-based company described the proposed purchase as 'neither credible nor attractive'
eBay has rejected the $56 billion takeover offer from GameStop, saying the proposal from GameStop CEO Ryan Cohen "is neither credible nor attractive". eBay, whose headquarters are in San Jose, California, said the board of directors and independent advisers had carefully reviewed the $125 per share proposal and decided to reject it, citing the growth prospects of the e-commerce company as an independent entity, the uncertainty surrounding GameStop's proposed financing and leverage, the operational risks and leadership structure expected for the new combined entity.
Analysts and investors had doubts as to whether the half cash, half stock offer of the $12 billion video game giant, for a company with a market capitalisation almost four times as large, would succeed.
EBay's stock has been trading well below the offered price of $125 per share since the offer was made earlier this month. In pre-market trading today, it was down 1.1 per cent at $107, while GameStop lost almost four per cent.
Possible hostile takeover offer
The rejection could lead to a hostile takeover offer, as GameStop's CEO Ryan Cohen had said he was willing to make the offer directly to eBay's shareholders, possibly by convening an extraordinary meeting.
Cohen argued that by merging GameStop and eBay, he could reduce costs and find synergies to create a much larger company, and said he could increase eBay's profitability by replicating GameStop's cost-cutting strategy and use its 600 US shops to create a physical network that would help eBay become a stronger competitor to Amazon.
