Global commerce giant Ebay has dismissed an audacious play from video game retailer Gamestop that sought to merge the two companies into a new titan to take on the dominance on Amazon.
Ebay’s chairman Paul Pressler said the firm’s board had “thoroughly reviewed [the] proposal and has determined to reject it”.
In a letter to Gamestop chief executive, Ryan Cohen, Pressler listed a litany of factors that contributed to the board’s conclusion, including Ebay’s “standalone prospects” and the impact a deal would have on its “long-term growth and profitability”.
Pressler also added there was uncertainty around Gamestop’s “governance and executive incentives”.
The world’s largest brick-and-mortar entertainment software retailer that valued Ebay at $125 a share – a $20 premium on the stock’s closing price in New York the previous trading session to the offer.
Cohen proposed that he becomes the chief executive of the new combined entity and “receive no salary, no cash bonuses, and no golden parachute”.
He added around $2bn of cost savings at the company would commence following the completion of the proposed deal.
Ebay goes on defensive
“[Ebay has] sharpened our strategic focus, strengthened execution, enhanced our marketplace and seller experience, and consistently returned capital to shareholders,” Pressler defended in his letter.
To fund the deal, Cohen said he had a commitment letter from TD Securities to provide around $20bn in debt financing to help the deal along.
In its response letter to Cohen, Ebay also noted the “uncertainty regarding your financing proposal” as posing concern.
Cohen, who built his reputation as the founder of online pet supplies retailer Chewy, has sought to reposition Gamestop as a rival to Amazon after criticising it for embracing e-commerce too slowly.
The retail chief became top boss at Gamestop in 2023, where he steered the firm back to profitability through aggressive cost cuts. The business is headquartered in Texas and has a valuation just shy of $12bn.
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