E-commerce company eBay (EBAY) has rejected a $56 billion U.S. takeover offer from video game retailer ?GameStop (GME).
In rejecting the acquisition bid from GameStop, management at eBay expressed doubts over the financing of the deal.
The rejection could lead to a hostile takeover battle as GameStop Chief Executive Officer (CEO) Ryan ?Cohen ?has said he ?is willing to take the offer directly to eBay shareholders.
Analysts have doubted whether the half-cash, half-stock bid ?from GameStop, which has a market capitalization of $10 billion U.S., would be enough for eBay, whose market value is four times greater.
The GameStop offer has drawn public criticism from many investors, including Michael Burry of “The ?Big Short” fame. He sold all ?his shares in GameStop immediately after the eBay bid.
Calling the deal “pedestrian”, Burry warned about the debt load and ?shareholder dilution that will likely take place if GameStop succeeds in acquiring eBay.
Cohen has said he wants to make eBay a better competitor to e-commerce leader Amazon (AMZN).
The CEO has also touted $20 billion U.S. in potential debt financing from TD Securities (TD) and GameStop’s ability to issue stock ?to fund the deal. But many analysts remain skeptical.
GME stock is down 17% over the past year and has fallen 42% over the last five years. The shares currently trade at $23.17 U.S. each.
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