Shopping giant eBay has rejected video game retailer GameStop’s ambitious $56 billion takeover bid, leaving the latter to decide whether it wants to pull out, raise the offer or take the fight directly to shareholders.
EBay’s board called the half-cash, half-stock offer “neither credible nor attractive” on Tuesday, according to Reuters, citing doubts about 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 emerged, a sign that investors were not convinced the deal could close.
That puts GameStop’s bitcoin position back into the conversation, as CoinDesk reported earlier this month.
The cult company has approximately $368 million in exposure to bitcoin through a covered call options strategy. It shifted almost all of its 4,709 BTC to institutional brokerage Coinbase Prime, a filing in March showed, converting the position into an account receivable rather than directly held bitcoin.
GameStop’s offering was based on $9.4 billion in cash and liquid investments, plus up to $20 billion in debt financing from TD Bank. But that financing depends on the combined company maintaining an investment grade rating, and Moody’s already warned that the deal would be credit negative for eBay. Increasing the offer or turning hostile would likely make the financing math more challenging.
Cohen previously described the eBay deal as “far more compelling than bitcoin,” leaving open the question of whether GameStop’s position in BTC could be undone if more cash is needed.
Selling it wouldn’t fund the deal on its own, but it’s one of the few discretionary assets GameStop can point to as it tries to convince investors the deal is real.
However, the market remains skeptical. eBay shares fell about 1% to $107 before the bell on Tuesday, still well below the offer price, while GameStop fell 4%.
The deal previously drew pushback from parts of GameStop’s own investor base.
Michael Burry, the investor who became famous for The big shortsold its stake after the offering and warned that buying eBay could put GameStop in debt and dilute shareholders.
