eBay has formally rejected GameStop CEO Ryan Cohen’s surprise $56 billion takeover proposal, saying the offer raised serious concerns about financing, long-term strategy, and the risks of combining the two companies.
The proposed deal, submitted on May 3, valued eBay at $125 per share in a mix of 50% cash and 50% GameStop stock. But from the beginning, investors and analysts questioned whether GameStop which is valued at around $12 billion could realistically acquire a company nearly four times its size.
On Tuesday, eBay’s board officially turned down the non-binding proposal after what it described as a “thorough review.” In a letter to Cohen, eBay chairman Paul Pressler said, “We have concluded that your proposal is neither credible nor attractive. eBay’s Board is confident the company, under its current management team, is well-positioned to continue to drive sustainable growth.”
Financing questions became the biggest concern
One of the biggest reasons behind the rejection was uncertainty around how GameStop planned to finance the massive acquisition. GameStop had said it would fund the cash portion using its existing cash reserves of about $9.4 billion as of January 31, 2026, along with outside financing. The company also disclosed a “highly confident” financing letter from TD Securities worth up to $20 billion.
However, analysts quickly pointed out that the financing was not fully committed funding. Market experts warned that if economic or market conditions worsened, raising that amount of money could become difficult.
During a CNBC interview last week, Ryan Cohen struggled to clearly explain how the deal would be financed. When asked about funding details, Cohen responded, “It’s on our website. It’s half cash, half stock.” The awkward exchange soon went viral online and added to investor skepticism. eBay’s board specifically said that “the uncertainty regarding your financing proposal” as a major factor behind its decision.
eBay says it does not need saving
eBay also made it clear that it believes the company is already on the right path and does not need to merge with GameStop to grow further. The company said its current management team has a clear long-term strategy and is capable of delivering steady growth independently.
Pressler wrote, “With its differentiated global marketplace and a clear strategy, eBay’s Board is confident that the company, under its current management team, is well-positioned to continue to drive sustainable growth, execute with discipline, and deliver long-term value for our shareholders.”
Major investor opposition strengthened that position
Smead Capital Management, which reportedly owns nearly 1.5 million eBay shares, publicly opposed the takeover. The firm’s chief investment officer Bill Smead argued that eBay remains a strong standalone business. Smead described eBay as the “New York Stock Exchange of preowned items” and suggested the company had no need to sell itself in order to continue growing.
Concerns over strategic fit
Analysts also questioned whether the two companies even fit together strategically. GameStop’s business is mainly focused on gaming retail, collectibles, and entertainment products, while eBay operates a much larger global online marketplace with a completely different customer base and operating structure.
Many experts said there appeared to be limited business synergies between the companies beyond possible cost-cutting efforts. eBay’s board also raised concerns about “the leverage, operational risks, and leadership structure of a combined entity,” suggesting the merger could create more problems than opportunities.
GameStop focused heavily on cost cuts
GameStop defended the proposal by arguing that eBay was overspending in several areas and that major savings could improve profitability quickly.
The company claimed it could cut around $1.2 billion in sales and marketing expenses, $300 million in product development costs, and another $500 million in general and administrative spending. GameStop pointed to eBay’s fiscal 2025 spending, noting that the company spent $2.4 billion on sales and marketing while its active buyer base increased only slightly from 134 million to 135 million users.
Based on those projected cuts, GameStop estimated eBay’s diluted earnings per share from continuing operations could rise from $4.26 to $7.79 in the first full year after the deal closed. Still, many investors remained unconvinced that aggressive cost-cutting alone justified such a large acquisition.
Investors never fully believed the deal would happen
The stock market reaction also showed skepticism around the proposal. Even after the offer became public, eBay shares never came close to the proposed $125-per-share valuation. The stock peaked at $111.38 before slipping lower. Before Tuesday’s market open, eBay shares fell 1% to about $107, while GameStop shares dropped 4%. The market response suggested investors doubted the takeover would actually go through.
The proposal also created concern among some GameStop shareholders. Investor Michael Burry, famous for “The Big Short,” reportedly sold all of his GameStop shares after the takeover bid was announced. Burry reportedly criticised the acquisition strategy as “pedestrian” and warned about the heavy debt burden and possible shareholder dilution that could result from the deal.