eBay rejects GameStop acquisition offer

In the latest chapter of the “GameStop wants to buy eBay” saga, eBay has decisively rejected what they refer to as a proposal that is “neither credible nor attractive.” Looks like GameStop and eBay won’t be joining forces to dominate the Pokémon trading card market after all. Perhaps you can stop selling selling $5,000 Pokémon packs now, GameStop.

On May 3, video game retailer GameStop made an offer to buy e-commerce platform eBay for $55.5 billion USD, to be paid 50% in cash and 50% in stock. In an interview with The Wall Street Journal, GameStop CEO Ryan Cohen explained that he aims to turn eBay into a “legit competitor for Amazon.” Should eBay’s Board of Directors be unreceptive to his offer of acquisition, he warned that he won’t shy away from a proxy fight.

It looks like the time for a proxy fight has now arrived, as a letter from eBay’s chairman, dated May 12, informs Cohen in no uncertain terms that eBay is not interested in the offer.

“The Board, with the support of its independent advisors, has thoroughly reviewed your proposal and has determined to reject it,” the letter says. eBay’s solo prospects, GameStop’s governance and uncertain finances, and the risks of continuing business as a combined entity were cited as reasons for the rejection. eBay, in other words, believes it’ll be more successful without GameStop meddling in its business.

GameStop’s offer had already raised many eyebrows, as eBay is worth about four times as much as the game retailer. When Ryan Cohen was questioned about the finances during a CNBC interview, he refused to explain how GameStop would acquire eBay without taking on considerable debt.

On top of that, GameStop’s credibility isn’t much aided by its reputation as the company that only survived Covid because Reddit users bought its stock en masse. Since then, GameStop has been slowly moving away from its focus on physical video game stores and closer to a business model that makes money off overpriced Pokémon cards. Owning eBay would certainly make the latter easier, but clearly, eBay isn’t into it.