Blockbuster U.K. Acquired by Private Equity Firm24 Mar, 2013 By: Erik Gruenwedel
Blockbuster will not die — in the United Kingdom. The bankrupt rental chain reportedly has been acquired by a British private equity firm — a move that will save 264 stores and 2,000 employees their jobs.
The price of the acquisition was not disclosed, according to The Telegraph, which first reported the story.
The deal for Blockbuster U.K., which filed for administration — a form of British bankruptcy protection late last year — was consummated March 22 between Gordon Brothers and Deloitte, the consulting firm overseeing the rental company’s operations.
Blockbuster U.K., which had 528 stores, 4,190 employees and claimed 2 million customers when it filed for bankruptcy in January, was considered a non-essential asset by Dish Network. The satellite TV operator acquired U.S. parent Blockbuster Inc. out of bankruptcy in April 2011.
Despite being known for liquidating assets of companies acquired under duress, Gordon Bros. apparently wants to continue the brick-and-mortar brand despite an influx of subscription video-on-demand options such as Netflix and Amazon-owned LoveFilm Instant. The latter also operates a by-mail rental service with about 1.9 million subscribers.
Indeed, more than 73% of all film and music sales are now done over the Internet, compared with 6.5% 10 years ago, according to retail research firm Conlumino.
“Blockbuster has a strong brand affinity and we believe that with the right mix of new product offering, new technologies, strategic management and marketing, we can bring new life to this high street staple,” Frank Morton, CEO of Gordon Bros., said in a statement.
Morton acknowledged the home entertainment industry is in transition, but believes there still exists a home video rental market to be served.
“We look forward to working with employees, suppliers, landlords and other stakeholders to make this happen,” he said.
Deloitte joint administrator Lee Manning Blockbuster managed to save about 50% of Blockbuster U.K. stores after selling 49 of them previously to a supermarket chain operator.
“Together with the previously announced store sales more than half of the original estate has been secured for ongoing use,” Manning said. “This transaction provides Blockbuster a future in the U.K. and we owe a special vote of thanks to all the company's employees, suppliers and customers for helping us rescue the business.”