Morgan Stanley sees GameStop counter, new suitor as next steps after eBay rebuff

Morgan Stanley notes that eBay (EBAY) has announced that it rejected GameStop’s (GME) unsolicited bid to buy eBay at $125/share, calling the proposal “neither credible nor attractive.” This was unsurprising with eBay only up about 3% since the proposed acquisition was announced, the firm adds. Notably, eBay’s board was concerned about more than the price, questioning the deal’s financing and leverage along with the impact on the resulting post-deal valuation. Given that, Morgan Stanley believes it is quite possible eBay’s board rejects a sweetened offer unless the other issues are cleared. With that said, the firm doesn’t believe this is the end of the story and outlines four potential next steps, namely a counteroffer, a direct proposal, failed GameStop Proxy Vote, or other bidder as another company could consider making an offer for eBay now that a potential deal has been floated. Morgan Stanley has an Overweight rating and a price target of $121 on eBay.