eBay’s levers have been cranked and its cogs have turned, and it finally has an official, damning response to GameStop CEO Ryan Cohen’s nonsensical bid to take over the company. It’s a big ol’ “Nope” in bold, underlined three times.
CNBC reports that eBay’s board wrote to Ryan Cohen on Tuesday, May 12, to make clear its categorical rejection of the silly man’s ridiculous attempt to buy a company five times larger than his own with borrowed money and bad math. A letter signed by eBay’s chairman of the board of directors, Paul S. Pressler, calls his offer “neither credible nor attractive.”
Last week, Cohen declared his intention to buy the colossal ecommerce site for $56 billion, and then was immediately left looking like a fool when asked where his $11bn company would get all the money. Despite a claimed $20 billion investor letter, his spurious figures still left the failing retail chain $14 billion short of his offer, making the whole performance look deeply unserious. eBay clearly reached the same conclusion, resoundingly rejecting Cohen’s “proposal.”
“We have taken into account such factors as 1) eBay’s standalone prospects, 2) the uncertainty regarding your financial proposal, 3) the impact of your proposal on eBay’s long-term growth and profitability, 4) the leverage, operational risks, and leadership structure of a combined entity, 5) the resulting implications of these factors on valuation, and 6) GameStop’s governance and executive incentives.”
Cohen had repeatedly suggested over the last week that he believed eBay was running inefficiently and not maximizing its profits for its shareholders, and he was the only person suitable to unlock these missing fortunes. He went as far as to say he’s basically bored with GameStop, but his passion now lies with eBay.
eBay, it seems, isn’t entirely convinced. In the letter, it calls itself “a strong, resilient business that has delivered meaningful results over the past several years,” and that its board is “confident that the company, under its current management team, is well-positioned to continue to drive sustainable growth, execute with discipline, and deliver long-term value for our shareholders.”
Cohen’s three years at the helm of GameStop have been marked with mass closures of outlets from the retail chain, an increasingly peculiar focus on operating like a gouging thrift store, and, most recently, acting as a sort of brick-and-mortar scalper for Pokémon cards. What isn’t there to like for eBay?! His purchase offer also relied upon dilution of the stock, which would potentially leave eBay shareholders on the hook for billions if the rabbit he promised to pull out of a hat never materialized.
This leaves Cohen in a somewhat unhealthy position. He recently told Business Insider, “I do not want to be the CEO of GameStop. I want to be the CEO of eBay. I’m passionate about eBay…I wasn’t passionate about GameStop.” So you do have to think that perhaps he won’t be quite as popular among the game store’s shareholders just now. Times are ridiculous enough that he could remain in position at a corporation he’s made clear he doesn’t want to run, and perhaps there’s no one else who’d want to step in to watch over the company’s death spiral into its inevitable bankruptcy.
For Cohen, the issue remains that his exit strategy on GameStop was to hit a market cap and profit milestones in order to unlock a $35 billion payout, but without a deal as unlikely as something on the scale of eBay, that’s absolutely never going to be achieved. And given how incompetent Cohen has repeatedly proven himself since his former success at Chewy, not least over the last week, it’s hard to imagine any other companies lining up to offer him a new executive position.