Online marketplace eBay on Tuesday rejected a proposal by GameStop to combine the two companies in a cash-and-stock deal worth about $55 billion, calling it “neither credible nor attractive.”

GameStop announced its proposal last week to combine with eBay, a company nearly four times its size. The offer has confounded much of Wall Street, in part over questions about how the company would afford it. GameStop CEO Ryan Cohen initially declined to elaborate on how he would finance the deal.

GameStop did not immediately return a request for comment.

eBay said Tuesday that it had led a thorough review of the offer with its legal and financial advisers. In a letter to GameStop, eBay’s chair, Paul Pressler, listed several concerns with the bid, including uncertainty about how it would be paid for and the amount of debt the deal would add to the company.

A cornerstone of the deal was a letter that GameStop secured from investment bank TD Bank, saying it was “highly confident” it would raise $20 billion to fund the offer. That letter, which is not binding, stated that the confidence rested in part on the assumption that the combined company would be investment-grade, according to at least two of the three major credit ratings agencies.

eBay does not believe the new company would be investment-grade, according to two people familiar with the deal who spoke on the condition of anonymity.

Ratings agency Moody’s has called the deal “credit-negative,” saying it would balloon eBay’s debt to $31 billion from $7 billion. Cohen has said he would cut about $2 billion in costs and rapidly repay the company’s debt, but eBay has concerns about the impact of cost cuts on the company’s revenue.

Last week, Michael Burry, an investor and former hedge fund manager, announced that he had sold all of his GameStop stock because he was worried about the amount of debt required for a deal.

Cohen has said eBay shareholders would exchange about half their shares for shares in the combined company, most likely providing them with majority ownership of the new entity. He has also said he might look for additional sources of equity to pay for the deal.

On Monday, GameStop said in a regulatory filing that it wanted to more than double the number of shares it was authorized to issue. That represents a potentially enormous amount of new stock that could fund, among other things, major acquisitions, while diluting GameStop investors’ holdings.

In the letter Tuesday, Pressler also stressed eBay’s improved performance as it has steered a turnaround to compete better with giants like Amazon. Shares of eBay are up about 55% over the past year, while shares of GameStop are down about 16%.

“We have sharpened our strategic focus, strengthened execution, enhanced our marketplace and seller experience, and consistently returned capital to shareholders,” Pressler wrote.

Shares of GameStop were down 2.4% in premarket trading, while shares of eBay, which have been trading below GameStop’s takeover price, were down 1%.

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This article originally appeared in The New York Times.

By Lauren Hirsch/Chona Kasinger
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