Blockbuster Offers to Buy Hollywood11 Nov, 2004 By: Stephanie Prange
Blockbuster Video today confirmed that it has expressed an interest to acquire HollywoodEntertainment Corp. for $11.50 per share in cash.
"Blockbuster's expression of interest has been communicated to HollywoodEntertainment, but has not yet resulted in a substantive discussion regardingthe terms of a potential transaction," a company press release stated.
"Blockbuster's proposal represents a 17 percent premium over the closing price ofHollywood Entertainment on Nov. 10, 2004, and a 12 percent premium over thevalue of Hollywood's current merger agreement," the release stated.
The release valued the deal at $1 billion, including assumption of Hollywood debt.
"Over the last several years, the home entertainment landscape hasbroadened considerably," the release stated. "The rental industry faces significant competitivethreats from nontraditional channels, largely attributable to retail DVD,which is widely available from a variety of retailers. ... Additionally, consumers have increasingmovie-delivery alternatives from technology-enabled sources, including cable,satellite and computer downloading."
"We believe this proposed transaction better positions Blockbuster tocompete in the rapidly changing home entertainment marketplace, whilesimultaneously benefiting consumers as well as Blockbuster and HollywoodEntertainment shareholders," said John Antioco, Blockbuster chairman and CEO."In addition to providing Hollywood Entertainment shareholders with asubstantial premium for their shares, the proposed transaction would give usmore ways to serve more customers by taking advantage of both companies'combined store distribution capabilities and brand portfolios."