By Svea Herbst-Bayliss and Abigail Summerville
NEW YORK, May 13 (Reuters) – GameStop CEO Ryan Cohen told eBay’s board on Wednesday that they should not reject his $56 billion takeover proposal and the e-commerce company’s shareholders deserve a chance to evaluate it.
Cohen reacted one day after eBay rejected his unsolicited offer to buy the company, calling the proposal “neither credible nor attractive.”
In a letter to eBay’s chairman and separate online interview with journalist Piers Morgan, Cohen, a billionaire investor, signaled his intention to keep going and hinted at possible next steps to try and win his prize.
Revered by many retail investors for having faced off against prominent hedge funds while investing in GameStop, Cohen has previously said he would make cost cuts and considerable changes at eBay, including running the combined company himself.
Referring to eBay’s board in the interview with Morgan, Cohen said: “They have a job to do their best for shareholders and engage on this and if they don’t then we’ll do whatever we need to do.”Â
In the letter to eBay Chairman Paul Pressler, Cohen emphasized that eBay shareholders deserved a say on his proposal and went on to criticize top management’s compensation.
“They should not dismiss a $125 per share proposal without engaging on its substance,” he wrote, adding: “The economics are clear and they are public. eBay’s own shareholders deserve the opportunity to evaluate them.”
Ebay on Wednesday declined to comment beyond the statement it made on Tuesday.
GameStop owns a 5% stake in eBay and some analysts speculated Cohen may try to call a special shareholder meeting where he might try to get directors elected who might view his proposal more favorably. But they also noted he would need a considerably larger stake to make such a move.
 Cohen also noted that he had requested a meeting with eBay’s board but had been rejected, according to the letter which was seen by Reuters.
SURPRISE OFFER
Earlier this month Cohen surprised Wall Street with his unsolicited offer to buy a company significantly bigger than his own when he offered $125 a share in cash and stock for each eBay share. GameStop has a market valuation of about $10 billion while eBay’s market value is roughly $50 billion.
On Tuesday eBay pointed to concerns with GameStop’s bid, including its financing, its impact on eBay’s long-term growth and the leadership structure of a potentially combined company.
The GameStop CEO previously said he has a debt financing commitment letter from TD, contingent on the combined company receiving an investment-grade rating. Moody’s said last week the deal would be credit negative for eBay.
Cohen’s letter on Wednesday compared his tenure as leader at GameStop with eBay chief Jamie Iannone’s six years at the helm. “He has received ~$144 million in compensation. He has not purchased a single share of eBay common stock in the open market,” Cohen’s letter said.Â
Cohen said about himself that he draws no salary, gets no cash bonuses and has no golden parachute. He said he has invested $128 million in GameStop common stock since 2020.
Some 88% of Iannone’s compensation is delivered in eBay equity.
Analysts noted that eBay already has an EBITDA margin of 31%, three times higher than GameStop’s 10%.
Cohen told Morgan: “I’m an owner-operator. I’m not one of these country club executives that get recruited through these professional agencies.”
Referring to eBay, he said, “I love the asset,” but added, “it’s run by a bunch of losers.”
(Reporting by Svea Herbst-Bayliss; Editing by Nia Williams and Stephen Coates)
