The smaller firm tried to buy the bigger one. The bigger one said no.
eBay said no to the $56 billion offer on Tuesday. The bid came from GameStop CEO Ryan Cohen. The board called it "neither credible nor attractive."
Cohen had offered $125 a share for the online shop. Half would be paid in cash. The other half would be paid in GameStop stock.
The size gap is the issue. eBay is worth about $48 billion. GameStop is worth about $10.3 billion. That is a video game shop trying to buy a firm nearly five times its size.
Cohen said GameStop lined up a $20 billion loan from TD Securities. The firm also has about $9 billion in cash on hand.
But eBay said the TD letter is not binding. It only holds if the merged firm keeps a top credit score. The rule is for at least two of the three big rating firms.
Moody's flagged the deal as "credit negative" last week. The bond firm said it would push debt loads too high.
That is a real risk. A credit cut could raise the cost of every dollar of debt the new firm would owe.
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Cohen pitched a leaner eBay. The plan called for fewer staff and less ad spend.
He said GameStop's 1,600 U.S. stores could also double as drop-off hubs. They could host live shopping for eBay orders too.
Cohen went on CNBC to make the case. He gave few specifics when pressed on how he would fund the deal.
He said the offer is half cash and half stock. He also said he has the power to issue more shares if needed.
eBay's chairman Paul Pressler hit back with a defense of current staff. Under CEO Jamie Iannone, the firm has leaned into focus areas.
Those include trading cards, used luxury, and collectibles. The plan aims to carve out space away from Amazon.
eBay shares are up 24% this year. Wall Street has mostly sided with the board.
Most analysts have flagged a lack of clear overlap. An online shop and a brick-and-mortar video game chain do not fit well.
Cohen said he is ready to take the offer straight to eBay shareholders if the board will not engage. That makes investor support the next thing worth tracking.
Cohen has a track record of pushing hard once a board says no. The next step would likely be a public proxy push.
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