GameStop Weighs Options After EBay Rejects $56B Takeover

TLDR

• EBay rejected GameStop’s $56 billion takeover offer and called the proposal neither credible nor attractive.
• The board said the half-cash, half-stock structure raised concerns about financing and execution.
• GameStop planned to fund the deal with $9.4 billion in cash and up to $20 billion in debt from TD Bank.
• Moody’s warned that the proposed transaction would be credit negative for EBay and could pressure its rating.
• EBay shares traded below the $125 per share offer, signaling doubts that the deal would close.

EBay has rejected GameStop’s $56 billion takeover proposal and dismissed the offer as inadequate. The board said the half-cash, half-stock structure lacked credibility and financing clarity. As a result, GameStop must decide whether to withdraw, raise its bid, or approach shareholders directly.

EBay and GameStop Face Financing Scrutiny

EBay’s board rejected the $125-per-share proposal and called it “neither credible nor attractive.” The company cited financing risks and said it remains better positioned under current management.

Reuters reported that investors expected the rejection because EBay traded below the offer price. Shares slipped about 1% to $107 before the bell, far under the bid.

GameStop structured the offer with $9.4 billion in cash and liquid investments. It also secured up to $20 billion in debt financing from TD Bank.

However, the debt depends on the combined company maintaining an investment-grade rating. Moody’s warned that the transaction would be credit negative for EBay.

As a result, any higher offer or hostile move could complicate the financing plan. The market reacted quickly, and GameStop shares fell 4%.

Michael Burry sold his stake after the bid surfaced and criticized the proposal. He warned that acquiring EBay could increase debt and dilute shareholders.

Bitcoin Holdings Reenter the Spotlight

GameStop holds about $368 million in bitcoin exposure through a covered-call options strategy. The company shifted nearly all of its 4,709 BTC to Coinbase Prime in March.

A filing showed that the transfer converted the bitcoin position into a receivable. CoinDesk reported earlier this month that the structure limits direct custody risk.

Ryan Cohen previously described the EBay transaction as “way more compelling than bitcoin.” His comment left open whether GameStop would unwind its BTC exposure to raise cash.

Selling the bitcoin would not fund the acquisition alone. Still, the asset remains one of the few discretionary holdings available.

GameStop built its offer around existing liquidity and planned borrowings. Yet analysts questioned whether the company could secure favorable credit terms.

Moody’s assessment increased pressure on the financing structure. The agency said the merger would strain EBay’s credit profile.

Meanwhile, EBay maintained that it sees stronger value in operating independently. The board repeated that it views the offer as lacking credibility.

The spread between the trading price and the bid reflected skepticism. Investors showed limited confidence that the deal would close.

GameStop must now evaluate its next steps and financing options. The company has not announced any revision to the proposal.

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