The online marketplace eBay has rejected the $55 billion takeover bid from bricks-and-mortar video game retailer GameStop.
On Tuesday eBay released a letter that its chairman, Paul Pressler, had sent to GameStop in which he stated that the takeover plan was "neither credible nor attractive."
GameStop had announced its proposal to merge with eBay - a company nearly four times its size - last week. The offer raised questions among market watchers about how GameStop could afford it.
eBay stated that it had thoroughly reviewed the offer together with its legal and financial advisors. In the letter to GameStop, Pressler raised several concerns about the financing of the takeover and the amount of debt the company would incur as a result of the transaction.
Pressler also highlighted eBay’s improved business performance, noting that the company had turned a corner to better compete with giants like Amazon.
“We have sharpened our strategic focus, strengthened execution, enhanced our marketplace and seller experience, and consistently returned capital to shareholders,” Pressler wrote.
GameStop rose to prominence early in the Covid-19 pandemic, when amateur investors — many coordinating on online forums such as Reddit — drove up its share price in a high-profile clash with hedge funds betting against the stock.
