eBay Rejects GameStop's $56 Billion Takeover As 'Neither Credible Nor Attractive'

An anonymous reader quotes a report from Reuters: EBay on Tuesday rejected a $56 billion takeover bid from the much smaller GameStop over financing doubts, calling the proposal "neither credible nor attractive." EBay, which has roughly four times GameStop's market value, also underscored that its turnaround efforts under CEO Jamie Iannone have boosted growth, with its stock returning 201% since Iannone took the position six years ago.

"We have concluded that your proposal is neither credible nor attractive," eBay Chairman Paul Pressler said in a statement. "eBay's Board is confident the company, under its current management team, is well-positioned to continue to drive sustainable growth." He also pointed to concerns with GameStop's bid, including its financing, its impact on eBay's long-term growth and the leadership structure of a potentially combined company. Last week, GameStop's CEO Ryan Cohen delivered one of the most memorable CNBC interviews in recent memory... initially disinterested, then increasingly hostile, with little eye contact, few real answers to basic questions, and repeated robotic deflections to "check the website." It's worth a watch if you have a few extra minutes.

Toystop

[Brain-Fu]

Gamestop charges way too much for used games. I can buy one much cheaper on ebay. Similarly, gamestop pays way too little for used games, and I can sell one for more on ebay. I guess that makes their interest in buying ebay kind of make sense.

The last time I walked into a gamestop I saw walls covered in toys. And trading cards too. The market is clearly shifting.

Re:Toystop

[supremebob]

Wouldn't the Gamestop/eBay combined company end up with a ton of debt if this deal goes through as planned?

We've seen this play out before with private equity buyouts, and it never seems to end well for the combined company.

Re:

[shanen]

Basically the same point I raised in an earlier discussion of this... What to call this? A leveraged buyout of the imagination?

However it makes about as much sense as most merger shenanigans and I would approve if at least one of the side effects was that eBay disappeared.

But I want to find a recursive joke somewhere around here... Something about eBay auctions/sales of merger/acquisitions/divestitures?

Re:

[Himmy32]

What to call this?

A creative gambit for free marketing.

the reason

[Anonymous Coward]

The Gamestop CEO has a provision in his employment contract that he gets an absolutely insane amount of stock if the company hits an impossible stock target. If however he were to acquire a much larger company he would hit that target. That is the only reason for doing this. Yes, if done, it would be a disaster (both because the high debt load would force ruinous changes at eBay which is a pretty good company by modern standards, and because the stock given to current eBay stockholders would plummet afterwa

Re:

[zlives]

his parents should have taken him out to the woodshed.

Re: the reason

[drinkypoo]

Or the gravel pit

Re:

[zlives]

no

Re:

[kellin]

Yeah this is just wrong.

As someone who puts up ads on Craigslist, Facebook Marketplace and eBay, I can definitively tell you that more stuff sells through eBay than the other places combined.. and I live in Los Angeles.

Re:

[Aighearach]

I have about $500 of vintage tools I ordered from ebay in the mail right now. I've also got over a dozen camera lenses that I purchased on there.

They're a thriving business with a high profit margin, reasonable debt load, good cash flow, and consistent modest earnings growth.

Re:

[sg_oneill]

I have about $500 of vintage tools I ordered from ebay in the mail right now. I've also got over a dozen camera lenses that I purchased on there.

So your the bastard who keeps outbidding me on camera lenses. Hiss!

Re:

[CommunityMember]

Wouldn't the Gamestop/eBay combined company end up with a ton of debt if this deal goes through as planned?

We've seen this play out before with private equity buyouts, and it never seems to end well for the combined company.

But the PE firms can make a lot of money (and that is all that matters in the late stage capitalism stage we are in).

Re:

[PPH]

Wouldn't the Gamestop/eBay combined company end up with a ton of debt if this deal goes through as planned?

Yeah. Somewhere along the line, Gamestop was seduced by the market manipulation angle. It seems that they have not yet gotten such ideas out of their heads.

Once again YouTuber Patrick Boyle covered this

[rsilvergun]

If you're not watching his channel you probably should be.

So the CEO of GameStop gets a huge payout if he can make the company worth $100 billion dollars on paper. The debt is completely irrelevant it just has to be a market cap of $100 billion dollars.

Being the oh so clever boy he is he decided to try and achieve that by using a leveraged buyout to purchase a much larger company and call it GameStop so that on paper he would go from a 11 billion dollar company to a 66 billion dollar company. Basica

Re:

[Aighearach]

You started strong but, as usual, you quickly went off the rails.

He's just an executive who got lucky who made a ridiculous buyout offer he can't finance so he can stay relevant. He's not "in power." He's in charge of a shitty little company that is failing slower than expected because they're popular with dude-bros and incels. He wasn't elected to anything, he isn't running for office, and the political system has nothing to do with this story at all.

Re:

[avandesande]

The last time I walked into a gamestop nobody had heard of COVID.

Wow

[pz]

The interview shows the CEO is kind of a jerk. He probably shouldn't be put in situations where communication is a requirement, like public interviews that are intended to help achieve an aggressive goal.

It's like he didn't understand he was on air during the conversation, despite the host clearly calling out that there was an audience listening.

The stark response from eBay is certainly understandable, having seen the interview.

Re:

[dysmal]

You nailed it. How the hell did he get a job like that? Being a CEO takes more than wearing a lather version of a Members Only jacket and a faux-hip haircut.

Re:

[Dishevel]

Yeah. That interview made the CEO look like an incompetent, greasy villian.

Re:Wow

[AnOnyxMouseCoward]

Hoooly shit. I never watch videos but your comment made me want to check.. and that dude is off his meds (or high on something).

Based on that interview alone, I would sell my Gamestop shares if I were a shareholder. Like... How do you get a CEO like that. Wouldn't trust this guy to run a car dealership.

Re:

[pz]

He's the CEO of a company whose value comes entirely from being a meme. Who do you think is going to run it? Also, he can't legally answer a lot of the questions they were asking him.

What questions that they asked, for which he said the answers were on the web site, can he not legally answer?

He clearly had an axe to grind with CNBC, given his multiple passive-aggressive mentions of how they predicted his downfall.

The one interviewer appeared to strike a body blow when she asked if his motivations were tied to a performance-based compensation package. All of GameStop's flailing malarky makes sense through that lens: the CEO was trying a hail mary, 'cause otherwise he gets didly-squat.

Re:

[sinkskinkshrieks]

He reminds me of Eastern European and Russian possibly spies that orbit Peter Thiel with regularity. They act like they know everything, the world owes them, and their behavior doesn't matter.

Just Getting Gamestop in the Headlines

[nealric]

This was never a serious offer. Even taking the guarantees at face value, they didn't have the money. The whole point was to keep Gamestop in the news cycle.

Re:

[UnknowingFool]

I don’t think that getting GameStop in the news was the reason. It seems more the CEO is trying a crazy idea because he has no other ideas. An ulterior motive might be CEO bonuses and plain capitalistic greed. Many good companies have been ruined when purchased in deals like leveraged buyouts. But the investors who did the deals made lots of money running companies into the ground. The customers and employees do not matter to them.

Re:

[nealric]

He knew full well this offer had 0% chance of being accepted. It was like walking into a car dealership and ask if they'd take IOUs written on a napkin as payment.

Slipped a decimal point?

[dave314159259]

GameStop has $56billion? Given their turn-of-the-century business model I'd be surprised if they had $56million.

Re:

[Ickyban]

That's part of the joke of the interview. No, they don't have that much cash and only a non-binding letter from a lender to cover part of this buyout and doucheboy wouldn't explain where the remainder would be sourced from.

Re:

[sinkskinkshrieks]

But but but a leveraged buyout allows lending rando CEO guy all those billions he doesn't have but thinks he deserves because he's part of the Epstein class.

Re:

[UnknowingFool]

Yes but there is initial required capital to start the process of a leveraged buyout. An average person like me cannot start a LBO. It seems like no one is willing to do that in this case. Generally the purchased company gets the debt while the investors sell off the company piece by piece to enrich themselves. In this case what assets does eBay have that can be sold? Maybe some real estate property but not a lot.

Sears is a classic example of how companies are ruined by LBOs. Sears owned most of the land

The real reasons ...

[sinkskinkshrieks]

The offer failed to include enough supercars and leather jackets.

(Due to the PayPal mafia, the eBay parking lot used to look like a supercar dealer in the dotcom times .. I unfortunately used to live near that block.)