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FinanceGameStop CEO Cohen's $56B eBay bid rejected as 'neither credible nor attractive'
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GameStop CEO Ryan Cohen's $56 billion unsolicited bid to acquire eBay was rejected by eBay's board as 'neither credible nor attractive.' Cohen offered $125 per share, half cash and half stock, with the cash portion coming from GameStop's $9.4 billion reserves and a $20 billion debt financing commitment from TD Securities contingent on investment-grade credit ratings. Analysts question the feasibility of financing a deal for a company nearly five times GameStop's size. One potential path for Cohen is a hostile tender offer directly to eBay shareholders, bypassing the board. However, major institutional investors like Vanguard, BlackRock, and State Street, who collectively own over 22% of eBay, are considered unlikely to support such a move. Analysts express skepticism, with one stating 'zero chance' a tender offer would succeed. eBay shares have risen 32% this year, valuing the company at roughly $51 billion.
Source report
By Svea Herbst-Bayliss and Abigail Summerville NEW YORK, May 27 (Reuters) — GameStop CEO Ryan Cohen shared few details when he said he would do "whatever we need to do" to buy eBay after the e-commerce company rejected his $56 billion unsolicited takeover bid as "neither credible nor attractive."
The Offer
In early May, Cohen offered eBay's board $125 per share, along with his services as CEO. The offer was structured as:
- 50% cash — sourced from GameStop's $9.4 billion in cash reserves
- 50% stock
GameStop also holds a non-binding commitment letter from TD Securities for up to $20 billion in debt financing, contingent on the combined company securing investment-grade credit ratings. Industry analysts have questioned whether that will be possible.
Cohen raised further questions on Wall Street with vague answers in recent interviews about how he would finance the acquisition of eBay, a company nearly five times the size of GameStop.
A Possible Path: Tender Offer
Despite eBay's resounding refusal, bankers, investors, lawyers, and industry analysts say Cohen has an unlikely — but not impossible — path to wresting control of eBay.
One option for Cohen, who co-founded online pet goods retailer Chewy and is credited with turning around GameStop in 2021, would be to bypass eBay's board by approaching shareholders directly with a premium buyout offer through a so-called tender offer, according to more than half a dozen bankers, lawyers, and analysts.
While tender offers are relatively rare, they can generate significant momentum. For example, Paramount Skydance used an all-cash tender offer to pressure Warner Bros Discovery into negotiations, despite its existing agreement to sell to Netflix. Paramount ultimately succeeded after being rejected at least half a dozen times.
Key Hurdles
GameStop would need to convince eBay's largest institutional investors, including:
- Vanguard
- BlackRock
- State Street
Together, these three firms — which run the world's biggest index funds — own more than 22% of eBay, holding the stock automatically as part of the indices they track. Analysts say it is highly unlikely these firms would approve a hostile takeover bid.
"There is zero chance that a tender offer works," said Don Bilson, head of event-driven research at Gordon Haskett. "No eBay shareholder would opt into this."
eBay's Performance
Shares of eBay have jumped 32% so far this year, giving the company a market value of roughly $51 billion. The company reported strong first-quarter earnings, citing growth in high-demand markets such as collectors of memorabilia, toys, and other items.
This article is for informational purposes only and does not constitute investment advice.
Source
Yahoo FinanceWestern
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eBay Rejects GameStop's $56 Billion Unsolicited Takeover Bid