eBay Inc. (NASDAQ:EBAY) has formally shut the door on GameStop Corp.‘s (NYSE:GME) bold $56 billion takeover attempt. On May 12, the GameStop eBay acquisition attempt came to a decisive end. eBay's board issued a rejection letter to GameStop CEO Ryan Cohen, declaring the unsolicited, non-binding proposal “neither credible nor attractive.”

The GameStop eBay takeover attempt, which began on February 4 when GameStop quietly started building a 5% stake in eBay, has now reached a pivotal turning point.

eBay Board Lays Out Reasons for Rejection

eBay Chairman Paul Pressler signed the rejection letter on behalf of the board. He outlined six specific factors that drove the decision.

First, the board pointed to eBay's strong standalone business prospects. Second, it raised serious doubts about the credibility of GameStop's financing plan. Third, it cited the potential harm the deal could cause to eBay's long-term growth and profitability.

Furthermore, the board flagged the heavy debt load and operational risks a combined company would carry. It also questioned the proposed leadership structure of any merged entity. Finally, it highlighted concerns about GameStop's corporate governance practices and CEO incentive structure.

“eBay's 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,” Pressler wrote.

The Deal’s Shaky Financial Foundation

To understand why the board pushed back so hard, the numbers tell the story clearly. GameStop proposed to buy eBay at $125 per share in a half-cash, half-stock deal. That valued eBay at roughly $55.5 billion.

However, GameStop's own market cap sits at approximately $11 billion, while eBay's stands near $48 billion. In other words, GameStop was attempting to purchase a company more than four times its own size.

To fund the deal, Cohen pointed to $9 billion in cash on GameStop's balance sheet, along with a $20 billion financing commitment from TD Securities. Even so, analysts quickly noted that the math still left a massive funding gap requiring billions more in additional borrowing.

Prediction market traders reflected that skepticism early. On Kalshi, traders gave the GameStop eBay acquisition roughly a 21% chance of success. On Polymarket, the odds sat around 22%.

Markets React as Both Stocks Fall

Investors responded to the May 12 rejection with clear anxiety. Shares of eBay slipped about 1.1% in premarket trading. GameStop shares fell harder, dropping around 4.1%.

That reaction followed a rough stretch for GME since Cohen formally submitted the bid on May 3. GameStop stock tumbled roughly 10% when markets opened on May 4. Meanwhile, on May 5, investor Michael Burry, widely known from “The Big Short,” sold his entire GameStop position after the deal structure became public. He warned followers on Substack that the proposal was dangerously over-leveraged, writing “Never confuse debt for creativity.”

What Comes Next: A Hostile Takeover Attempt?

The big question now is whether Cohen escalates. Before eBay's rejection, Cohen told reporters he was willing to take the offer directly to eBay shareholders, possibly through a special meeting, if the board refused to engage.

That path would effectively turn the GameStop eBay acquisition into a hostile takeover attempt, a far more expensive and uncertain road. Cohen has not yet responded publicly to the May 12 rejection letter, and GameStop did not immediately issue a comment.

eBay also added a notable footnote to its 8-K filing on May 12. The company revealed that GameStop had omitted a TD Securities financing letter, dated May 1, from its public disclosures, though eBay had received it as part of the original proposal. eBay attached that letter as an exhibit, effectively making the financing document part of the public record.

Cohen’s Broader Ambition

The rejected bid fits into Cohen's larger vision for GameStop's future. Earlier in 2026, he announced plans to transform the video game retailer into a diversified holding company, drawing comparisons to Berkshire Hathaway. Cohen argued that GameStop's roughly 1,600 U.S. stores could serve as physical drop-off and authentication hubs for eBay's online marketplace, especially for collectibles and secondhand goods.

Still, Wall Street remains largely unconvinced. eBay's board has now spoken, the market has voted with falling share prices, and legendary short-sellers have exited their positions. Cohen's next move will determine whether this story ends here or enters a far more contentious chapter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.