GameStop hits the limits of credibility with $55.5bn eBay bid | Nils Pratley
Summary
GameStop made a $55.5 billion offer to buy eBay, a company four times its size, but eBay called the offer not credible or attractive. The deal would rely heavily on uncertain financing, and eBay’s shares have risen steadily, making the offer less appealing to its owners.Key Facts
- GameStop proposed to buy eBay at $125 per share, half in cash and half in new GameStop shares.
- GameStop was valued at $11 billion before this offer, while eBay is about four times larger.
- The $28 billion cash part of the offer depends largely on possible loans if GameStop gets good credit ratings.
- eBay’s board rejected the offer, finding it unrealistic and unattractive.
- eBay’s stock has grown by 50% in the past year, meaning shareholders might not want to switch to GameStop stock.
- GameStop’s CEO, Ryan Cohen, said he will keep pushing for the deal despite resistance.
- GameStop became famous in 2021 for a dramatic rise in its share price caused by amateur traders working together online.
- Since the news of the offer, GameStop’s shares have dropped, showing some doubt among investors.
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