Retail giant eBay has rejected video game retailer GameStop’s ambitious $56 billion takeover offer, leaving the latter to decide whether to withdraw, increase its offer or fight directly with shareholders.
EBay’s board on Tuesday called the half-cash, half-stock offer “neither credible nor attractive,” according to Reuters, citing doubts over financing and arguing that the company is better positioned under its current management. The rejection was widely expected. eBay has traded well below GameStop’s $125 per share offer since the offer surfaced, a sign that investors weren’t convinced the deal could go through.
This puts GameStop’s Bitcoin position back in the conversation, as CoinDesk reported earlier this month.
The cult firm holds exposure to Bitcoin worth approximately $368 million through a covered call strategy. He moved almost all of his 4,709 BTC to institutional brokerage Coinbase Prime, a filing in March showed, turning the position into a debt obligation rather than directly held bitcoin.
GameStop’s offering is built around $9.4 billion in cash and liquid investments, as well as up to $20 billion in debt financing from TD Bank. But that financing is contingent on the combined company maintaining an investment-grade rating, and Moody’s has already warned that the deal would have a negative impact on eBay’s credit. Increasing the supply or becoming hostile would likely make financing calculations more difficult.
Cohen has previously called the eBay deal “much more compelling than Bitcoin,” leaving open the question of whether GameStop’s BTC position could be unwound if more liquidity was needed.
Selling it wouldn’t fund the deal itself, but it’s one of the few discretionary assets GameStop can point to in an attempt to convince investors the offer is real.
The market, however, remains skeptical. eBay shares fell about 1% to $107 before the bell Tuesday, still well below the offering price, while GameStop fell 4%.
The deal had already sparked opposition from some of GameStop’s own investor base.
Michael Burry, the investor made famous by The big shortsold its stake after the offering and warned that buying eBay could put GameStop in debt and dilute its shareholders.
