EBay rejects GameStop’s $56 billion takeover bid, calling it ‘neither credible nor attractive’

EBay on Tuesday rejected GameStop’s $56 billion takeover proposal, calling the unsolicited bid “neither credible nor attractive.”

GameStop CEO Ryan Cohen last week unveiled an audacious bid for eBay, offering to acquire the online marketplace for $125 per share in a cash-and-stock deal. EBay is much larger than the video game retailer, with a market cap of just over $48 billion, while GameStop’s is roughly $10.3 billion.

“The Board, with the support of its independent advisors, has thoroughly reviewed your proposal and has determined to reject it,” Paul Pressler, the chairman of eBay’s board, wrote in a letter. “We have concluded that your proposal is neither credible nor attractive.”

GameStop didn’t immediately respond to a request for comment.

EBay listed several concerns with GameStop’s offer, including “the uncertainty regarding your financing proposal,” along with operational risks and the debt load that would result from the proposed transaction.

Cohen said GameStop had lined up a $20 billion financing commitment from TD Securities, part of TD Bank, and the company has about $9 billion in cash on hand, but the funding gap remains substantial.

The financing letter, released by eBay on Tuesday and which is not binding, stated that TD’s expression of confidence assumes that the combined company maintains an investment-grade credit profile from at least two of the top three ratings agencies. CNBC previously reported TD’s letter included that key condition.

Moody’s Ratings said last week that the proposed acquisition would be “credit negative” for eBay because of the substantial increase in leverage implied by the deal structure.