GameStop weighing withdrawal of eBay bid, Bloomberg News reports
GME•GameStop may drop takeover bid for eBay
Aug 10 (Reuters) - GameStop CEO Ryan Cohen is considering withdrawing the videogame retailer's $56 billion bid for eBay and may instead pursue a partnership or joint venture with the e-commerce company, Bloomberg News reported on Monday, citing people familiar with the matter.
Cohen is considering a proposal that would allow eBay to leverage GameStop's roughly 1,600 U.S. retail locations, potentially helping both companies expand market share in higher-margin categories such as trading cards and collectibles, the report said.
As part of any partnership, GameStop would seek seats on eBay's board, Bloomberg reported.
Shares, prior rejection and strategic background
GameStop shares were up 2%, while those of eBay fell 1.4% in premarket trading.
The latest shift comes after eBay rejected GameStop's unsolicited takeover proposal in May, saying the offer was "neither credible nor attractive."
The original bid was met with skepticism from investors and analysts, given that the much smaller GameStop was attempting to acquire a company worth nearly six times its own market value. Analysts also questioned the financing plan, which relied heavily on debt commitments and stock issuance.
While both companies have sought to expand in categories such as trading cards and collectibles, their business models are markedly different. eBay operates an online marketplace that earns fees by connecting buyers and sellers, while GameStop is a brick-and-mortar retailer that purchases inventory and resells it through its store network.
GameStop has not made a final decision and Cohen could still pursue other options, according to the Bloomberg report.
GameStop and eBay did not immediately respond to Reuters' requests for comment. Reuters could not independently verify the report.
In July, GameStop disclosed it had increased its stake in eBay to 9.8%, making it one of the e-commerce company's largest shareholders, while Cohen vowed to pursue a deal "one way or another" after eBay rejected the videogame retailer's unsolicited $56 billion takeover offer.
