Blockbuster Says Upped Offer Blocked by Hollywood Board1 Dec, 2004 By: Erik Gruenwedel
Blockbuster today said attempts to introduce an acquisition price potentially higher than its current $11.50 per share interest for Hollywood Entertainment Corp. has met resistance from Hollywood's board of directors.
Under a confidentiality agreement, the No. 1 video rental chain requested access to Hollywood's books (confirmatory information) — a request Hollywood reportedly is reluctant to address unless Blockbuster agrees to a “standstill requirement.”
Under such a requirement, Blockbuster would be prohibited, among other things, from circumventing Hollywood's board with an offer (sometimes referred to as hostile) directly to shareholders.
Hollywood claimed it is bound to a “standstill” provision — common in mergers and acquisitions — due to its existing $10.25 per share merger agreement with Leonard Green Partners and Hollywood founder and CEO Mark Wattles.
Blockbuster has refused to sign such an agreement.
“We believe Hollywood's requirement that Blockbuster's receipt of basic confirmatory information be tied to standstill restrictions is depriving Hollywood shareholders of the opportunity to potentially receive greater value for their shares,” said John Antioco, chairman and CEO of Blockbuster, in a statement.
A Hollywood representative was unavailable for comment.