EBay has turned down Ryan Cohen’s unsolicited offer to take over its business, saying it’s better off on its own.
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The online marketplace giant said in a Tuesday press release that it has officially rejected the GameStop CEO’s $55.5 billion bid for the company.
“We have concluded that your proposal is neither credible nor attractive,” eBay’s chairman, Paul Pressler, wrote in a letter to Cohen, before outlining six factors influencing the decision.
They were:
“EBay’s standalone prospects.””The uncertainty regarding your financing proposal.””The impact of your proposal on eBay’s long-term growth and profitability.””The leverage, operational risks, and leadership structure of a combined entity.””The resulting implications of these factors on valuation.””GameStop’s governance and executive incentives.”
As of 10 a.m. ET, GameStop and eBay shares were both down more than 1%, while the Russell 3000 and S&P 500 were down around 0.6% each.
Cohen told Business Insider’s Sarah Needleman last week: “I’m going to continue doing whatever I need to do in order to buy the business.”
GameStop offered to acquire eBay for $125 a share in a cash-and-stock deal. For the cash portion, it pointed to roughly $9.4 billion on its balance sheet and a “highly-confident letter from TD Securities for up to $20 billion.”
Cohen, who wants to serve as CEO of the combined company, said in his proposal that he could deliver $2 billion of annualized cost reductions within 12 months of the deal closing.
He added that GameStop’s roughly 1,600 US retail locations would give eBay a “national network for authentication, intake, fulfillment, and live commerce.”
Chewy’s billionaire cofounder has been trolling eBay in recent days, saying he’s raising money for the acquisition by auctioning off baseball cards and GameStop merchandise on its website, and publicly complaining about its customer service.
He went viral for an awkward CNBC interview in which he seemed reluctant to explain precisely how the deal would be funded, given GameStop’s market value is around $10 billion, and eBay is worth nearly $50 billion.
Cohen recently lost one of his biggest champions after Michael Burry, the investor of “The Big Short” fame, revealed he had sold his entire GameStop stake after assessing Cohen’s eBay proposal.
Burry, who had touted Cohen’s potential to be the next Warren Buffett, calculated that the deal would lump GameStop with onerous amounts of leverage and debt service.
In the statement rejecting Cohen’s bid, eBay chairman Pressler described eBay as a “strong, resilient business,” said it had made significant progress in recent years, and added that he was confident that its existing management could “continue to drive sustainable growth, execute with discipline, and deliver long-term value for our shareholders.”
GameStop did not immediately respond to a request for comment.
