Whalesbook
EBay's board delivered a definitive rejection Tuesday to GameStop's ambitious $56 billion acquisition offer, declaring the proposal "neither credible nor attractive." The online marketplace cited significant doubts surrounding GameStop's ability to secure financing for the complex half-cash, half-stock bid, asserting that EBay is better positioned under its current management.
Financing Hurdles
The rejection was largely anticipated, as EBay shares consistently traded well below GameStop's proposed $125 per share valuation, signaling investor skepticism. GameStop's bid was contingent on approximately $9.4 billion in existing cash and liquid investments, supplemented by up to $20 billion in debt financing from TD Bank. However, this debt financing is conditional on the combined entity maintaining an investment-grade credit rating. Credit rating agency Moody's had already warned that such a deal would be credit negative for EBay, suggesting that raising the offer or pursuing a hostile takeover would further complicate financing arrangements.
GameStop's Bitcoin Strategy
With the takeover bid faltering, GameStop's substantial cryptocurrency holdings have re-entered the spotlight. The company holds roughly $368 million in Bitcoin exposure, primarily managed through a covered-call options strategy. GameStop has shifted nearly all of its 4,709 Bitcoin holdings to institutional brokerage Coinbase Prime, converting the position into a receivable rather than direct ownership. While GameStop's executive Ryan Cohen previously framed the EBay deal as "way more compelling than bitcoin," the potential need for additional cash raises questions about whether this Bitcoin position could be unwound to fund the acquisition.
Market Reaction
Investor sentiment reflected the likely outcome. EBay shares saw a modest decline of about 1% to $107 in pre-market trading Tuesday, remaining significantly below the offer price. GameStop's stock also fell, dropping 4%. The proposed acquisition had already drawn criticism from parts of GameStop's own investor base, including investor Michael Burry, who warned that the deal could saddle GameStop with debt and dilute shareholder value.