eBay has officially rejected the acquisition proposal submitted by GameStop, which valued the company at $56 billion, a figure that sparked strong reactions on Wall Street due to its scale relative to the video game retailer’s financial capacity.

GameStop’s proposal involved paying half of the purchase price in cash and the other half in shares. However, analysts and investors questioned from the outset whether a company with a market capitalization of around $12 billion could realistically acquire a business worth nearly four times as much.

eBay shares were trading significantly below the proposed offer price of $125 per share since news of the proposal first emerged earlier this month. In Tuesday’s premarket trading, eBay shares were down 1.1% at $107, while GameStop shares fell nearly 4%.

eBay Chairman Paul Pressler stated in a letter to GameStop’s management that the proposal was considered “not credible and not attractive.”

“The eBay board of directors is confident that the company, under its current management team, is in a strong position to continue delivering sustainable growth,” he noted.

The rejection of the proposal could potentially lead to a hostile takeover attempt, as GameStop CEO Ryan Cohen has already indicated he is willing to appeal directly to eBay shareholders, including through the convening of a special shareholder meeting.

Cohen argues that a combination of the two companies could generate significant synergies and reduce operating costs, ultimately creating a much larger business group.

According to his plan, GameStop could improve eBay’s profitability through aggressive cost-cutting measures, while its network of approximately 600 physical stores across the United States could serve as an operational base to strengthen eBay’s competitiveness against Amazon.

Source: protothema.gr