eBay (NASDAQ: EBAY ) on Tuesday told GameStop (NYSE: GME ) to accept its roughly $56 billion takeover offer and leave it at the door, calling it “neither credible nor attractive.”
Speaking in a press release, eBay’s board said: “This decision was made after a comprehensive review with the support of our financial and legal advisors.”
Cryptopolitan previously reported that GameStop CEO Ryan Cohen wanted to buy all of eBay’s stock through a half-cash, half-stock deal, where he would take a 5% stake in eBay.
eBay says Ryan failed to reach a firm deal that protected shareholders
eBay’s board gave several reasons for rejecting Ryan, ranging from its business outlook, questions about GameStop’s financing, risks to eBay’s future growth and earnings, the amount of debt the combined company would take on, and the challenge of merging two very different companies.
“With its differentiated global marketplace and clear strategy, eBay’s board is confident that the company, under its current management team, is well positioned to continue delivering long-term value for our shareholders,” eBay said.
Moody’s Ratings had already said that a GameStop-eBay acquisition about a week later would be a terrible idea, because it would result in a heavy debt load. Although the agency maintained eBay’s Baa1 stable rating and outlook.
Moody’s noted that eBay’s adjusted debt was about $7.2 billion as of the end of 2025. The company’s adjusted EBITDA for the last 12 months was about $3.1 billion, and total leverage was close to 2.3x. Taking into account about $20 billion in additional deal debt and GameStop’s $4.2 billion in existing debt as of the end of 2025, total debt is about $31.4 billion.
This represents a more than 400% increase in eBay’s debt structure on a standalone basis without considering any cost synergies. Given the combined pro forma performance using eBay’s EBITDA of $3.1 billion and GameStop’s EBITDA of $345 million, total leverage could be close to 9x at close.
The additional interest bill also seemed heavy. Moody’s estimated annual interest cost of the new debt could exceed $1 billion, assuming the new borrowing cost is higher than eBay’s current weighted average of 5% to 6%. eBay had roughly $900 million in free cash flow after dividends in 2025. GameStop had about $600 million at the end of the fiscal year. Moody’s said the combined company’s free cash flow would be tight if real money had to be spent to get the planned savings.
GameStop It said it could find about $2 billion in annual synergies within 12 months of the shutdown. She said 60% would come from sales and marketing, 25% from general and administrative costs, and 15% from product development. Moody’s said this would be equivalent to about 3.25 times the deleveraging potential if all this happened without any offsetting costs or losses.
The difference between the two companies was quite clear. eBay reported revenue of approximately $11.1 billion and EBITDA of $3.1 billion, with an EBITDA margin of 28.2%.
GameStop had revenue of about $3.6 billion and adjusted EBITDA of about $345 million, with EBITDA margins of about 10%. GameStop noted that there are approximately 1,600 retail stores in the United States that can be used for authentication, acceptance, fulfillment and direct trade purposes.
Moody’s Reviewer One element in the bond structure of eBay. According to her, while eBay’s bond notes appear to provide provisions for a change of control, there appears to be no such provision for $750 million of 3.65% bonds due in 2042.
If the acquisition is deemed to be a change in control, and if an event occurs in which eBay’s rating is downgraded by the two rating agencies beyond investment grade within a specified period, holders of the notes will have the option to redeem the notes at 101%. This means GameStop will need additional funds to pay off the bond debt.
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