GameStop CEO Could Withdraw $56 Billion Bid on eBay

GameStop is reportedly considering withdrawing its $56 billion proposal to acquire eBay.

Instead, GameStop CEO Ryan Cohen is thinking about proposing a partnership or joint venture that would let eBay leverage the video game retailer’s 1,600 locations in the U.S., Bloomberg News reported Monday (Aug. 10), citing sources familiar with the matter.

The sources said his arrangement could allow both companies to boost their market share in high-margin areas like trading cards and collectibles. They added that GameStop, one of eBay’s biggest shareholders, would want a place on the company’s board in any partnership.

The Bloomberg report notes that GameStop’s stock has fallen 28% since Cohen floated the offer in May, while eBay’s has risen 7.6%. The sources told Bloomberg GameStop hasn’t made a final decision and Cohen could still consider other options.

PYMNTS has contacted both companies for comment but has not yet gotten a reply.

GameStop in early May submitted a surprise, nonbinding proposal to acquire 100% of eBay. After that deal closed, Cohen would serve as chief executive of the new combined company.

In a letter to eBay, GameStop argued that it could cut the eCommerce company’s sales and marketing costs as part of $2 billion in annual cost reductions within 12 months of closing.

However, eBay rebuffed GameStop’s acquisition offer a little more than a week later, calling the proposal “neither credible nor attractive.”

EBay said in an announcement that its board had reviewed the takeover bid and decided to reject it based on eBay’s “standalone prospects,” “uncertainty” on how the acquisition would be funded, and the impact of the deal on its long-term profitability and growth.

In an interview with Bloomberg TV last month, Cohen said GameStop was continuing its acquisition pursuit. While declining to say whether he planned to raise his bid, the CEO said “we’re coming for eBay one way or another.”

Cohen told Bloomberg he wants to make the combined company into a $1 trillion business, in part by developing a digital marketplace for video game items, tapping into synergies between the companies’ collectibles businesses, and using GameStop locations as hubs for authenticating trading cards.

eBay last week reported quarterly earnings showing 15% increases in both revenue ($3.2 billion) and gross merchandise value ($22.4 billion).

“The results suggest eBay is generating growth by concentrating on areas where inventory scarcity, trust and seller expertise matter more than delivery speed alone,” PYMNTS wrote.