In a rejection letter to GameStop co-founder Ryan Cohen, eBay said GameStop’s unsolicited proposal to buy the online marketplace company was not credible and not attractive, a decision that underscored the gap between the two companies’ views of the deal’s merits.
The eBay board, through Chairman Paul Pressler, said in the letter that it had completed its review of GameStop’s offer and believed eBay was a “strong, resilient business.” Pressler’s letter also said eBay’s board was confident the company, under its current management team, was well-positioned to continue to drive sustainable growth, execute with discipline, and deliver long-term value to shareholders.
GameStop’s pursuit of eBay began after the national gaming retailer disclosed earlier this month that it was pursuing a takeover, framing the deal as a vehicle to help it compete with Amazon. One proposal described by GameStop included using GameStop’s about 1,600 U.S. stores as drop-off and shipping locations for eBay purchases.
GameStop’s offer was described as valuing each eBay share at $125 in cash and stock. The company’s proposed equity value was reported as $55 billion on paper, according to the disclosure referenced by eBay’s response.
GameStop also previously said it started accumulating shares in eBay in February and that it currently held a 5% stake. EBay’s board letter did not accept the premise that the offer advanced eBay’s strategy, instead concluding that eBay remains well-positioned without the proposed change in control.
The reporting also said one part of GameStop’s proposal included live sales broadcasts from GameStop locations that would feature eBay products. GameStop did not immediately respond to a request for comment.
After eBay’s stance became clear, GameStop’s stock fell 4% before the market open on Tuesday, according to the same report.