eBay GameStop Takeover Rejected by Board

eBay Inc. rejected GameStop Corp.’s unsolicited $125-a-share takeover proposal on May 12, 2026, citing doubts about financing and risks to its standalone growth. The half-cash, half-stock bid was deemed not credible, leaving GameStop to pursue shareholders directly in a potential proxy fight.

Board Rejects Takeover Bid

After consulting financial and legal advisers, eBay’s board decided to reject GameStop’s non-binding acquisition proposal and reaffirmed its commitment to a standalone, growth-focused turnaround. The board cited concerns about the proposal’s financing credibility and its potential impact on eBay’s long-term growth, profitability, governance, and valuation.

eBay highlighted recent operational progress, including $2.4 billion spent on sales and marketing in fiscal 2025 and an increase of about 1 million net active buyers, raising the total from 134 million to 135 million.

Bid Terms, Ownership, and Outlook

GameStop submitted its non-binding proposal on May 3, 2026, offering to acquire all eBay shares it did not already own, with consideration split evenly between cash and GameStop stock. The offer was conditioned on clearance under the Hart-Scott-Rodino Act.

In a post-proposal SEC Form 425 filing, GameStop disclosed direct ownership of 25,000 eBay shares and economic exposure to 23,176,000 additional shares through put-and-call option pairs expiring on February 23, 2028. The filing noted these options may be cash-settled until regulatory approval is obtained, raising questions about the mechanics of funding and settlement.

Ryan Cohen declined to disclose financing details during a May 11 television interview, leaving the proposal’s funding sources unverified. GameStop indicated it would take the offer directly to eBay shareholders and might seek board seats in a proxy contest. The company outlined plans for roughly $2.0 billion in first-year cost reductions, including cutting marketing spending by about half—approximately $1.2 billion annually—and converting around 1,600 stores into fulfillment centers.

The proposal exposed a significant size mismatch: GameStop’s market capitalization was about $12 billion before the offer, compared with eBay’s roughly $46 billion. Credit analysts described the bid as credit-negative for eBay, modeling combined company debt rising from about $7 billion to $31 billion. This amplified concerns about leverage, integration risks, and deal financing.

GameStop began accumulating an ownership stake in eBay earlier in the year, building roughly a 5% position by early February, which preceded the public disclosures and drew attention to its derivative positions and strategic intent.

Quote

"Following a thorough review with the support of its financial and legal advisors, the company's Board of Directors has determined to reject GameStop's unsolicited, non-binding acquisition proposal." — eBay press release