GameStop CEO Cohen, who has built a 5 percent position in eBay, has hinted he may take offer directly to eBay shareholders.

EBay has rejected a $56bn takeover bid from the much smaller GameStop over financing doubts, calling the proposal “neither credible nor attractive”.

EBay, which has roughly four times GameStop’s market value, also underscored on Tuesday that its turnaround efforts under CEO Jamie Iannone have boosted growth, with its stock returning 201 percent since Iannone took the position six years ago.

“We have concluded that your proposal is neither credible nor attractive,” eBay Chairman Paul Pressler said in a statement. “eBay’s Board is confident the company, under its current management team, is well-positioned to continue to drive sustainable growth.”

He also pointed to concerns with GameStop’s bid, including its financing, its effect on eBay’s long-term growth and the leadership structure of a potentially combined company.

GameStop did not immediately respond to a request for comment.

Last week, GameStop CEO Ryan Cohen surprised Wall Street with his bid, which included a $20bn debt financing commitment from TD Bank.

Analysts and investors have doubted whether the half-cash, half-stock bid for eBay from the $12bn videogame retailer would close.

EBay stock has been trading far below the offer price of $125 per share since the bid was made this month. It fell 1.3 percent on Tuesday to $106.68, while GameStop was down nearly 2 percent in early trading. In the last 12 months, eBay’s stock has climbed 56 percent while GameStop’s has dropped 18 percent.

Cohen, who has built a 5 percent position in eBay, has signalled he may be ready to take the offer directly to eBay shareholders, possibly by calling a special meeting. That can be difficult as calling a meeting requires a bigger stake.

The GameStop CEO 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. Sources familiar with the matter said eBay thinks it is highly unlikely that a combined company would be considered investment grade.

Cohen has argued that by combining GameStop and eBay, he could cut costs and find synergies to create a much bigger enterprise.

Analysts noted that eBay already has an EBITDA margin of 31 percent, three times higher than GameStop’s 10 percent.

Cohen said he could boost eBay’s profitability by replicating GameStop’s cost-cutting drive and use its 600 US stores as a physical network to help turn eBay into a tougher rival to Amazon.

The proposed deal is drawing attention in a robust mergers and acquisitions market and among retail investors, for whom Cohen has been a hero since he helped rally a short squeeze in 2021 that hurt hedge funds such as Melvin Capital.

The offer has upset some GameStop investors. Michael Burry, of The Big Short fame, sold his stake after the offer, warning it would saddle GameStop with debt and dilute share value.

Both eBay and GameStop sell collectibles such as trading cards, but their main businesses are different. While eBay earns fees by connecting buyers and sellers online without holding inventory, GameStop buys goods wholesale and resells them through physical stores.

In a CNBC interview, Cohen offered little explanation of how GameStop would finance the deal.

When pressed, Cohen said the deal would be paid for with cash and stock.

Cohen wrote to eBay’s board that he would serve as the combined company’s CEO and take no salary, cash bonuses or golden parachute.

The 40-year-old billionaire cemented his fortune by cofounding and then selling online pet food retailer Chewy, before making a big bet on GameStop when the retailer had a much lower market valuation of $250m.

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