EBay Inc (NASDAQ:EBAY, XETRA:EBA) has rejected a $56 billion takeover approach from GameStop Corp (NYSE:GME), dismissing the proposal as lacking credibility and raising concerns over financing, governance and the risks of combining the two businesses.
Shares in eBay fell 0.9% in pre-market trading, while GameStop stock was trading 4.2% lower.
In a letter to GameStop chief executive Ryan Cohen, eBay chairman Paul Pressler said the board had conducted a thorough review of the unsolicited bid with its advisers and concluded that the offer was “neither credible nor attractive”.
The online marketplace said it remained confident in its standalone strategy and current management team, pointing to recent operational improvements and shareholder returns.
GameStop, which is currently valued at just below $11 billion, unveiled the approach earlier this month, offering $125 a share in cash and stock in a deal that would have made Cohen chief executive of the enlarged group.
The games retailer argued that eBay could become a stronger rival to Amazon by using GameStop’s 1,600 US stores as locations for authentication, fulfilment and live commerce.
Cohen had threatened to go hostile, taking the offer directly to shareholders if it was rejected, insisting he was uniquely qualified to run eBay.
The proposal has faced scepticism on Wall Street because of questions over funding. GameStop had about $9.4 billion of liquidity at the end of January and said it had secured up to $20 billion of debt financing from TD Securities.
Cohen has declined to provide further detail on financing plans, fuelling investor concerns about potential shareholder dilution from the volume of new shares that would need to be issued to make up the equity portion of the deal.