FTC Seeks Delay in Blockbuster's Hollywood Bid4 Mar, 2005 By: Erik Gruenwedel
The Federal Trade Commission today filed a motion in federal court to block a possible hostile takeover by No. 1 Blockbuster of No. 2 Hollywood Video March 11.
The motion, filed in U.S. District Court for the District of Columbia, cited Blockbuster's “incomplete” and “deficient” responses to data requests Jan. 12 related to pricing and late fees, among other requirements.
In doing so, the FTC seeks to restart a mandatory 30-day waiting period to explore regulatory issues between the merging companies.
At deadline, a Blockbuster representative was unavailable for comment.
Blockbuster has proposed a $14.50 per share, or $1.3 billion, offer for all outstanding shares of Hollywood — later amended to include up to $225 million of Hollywood's long-term debt.
The offer upped a previous $11.50 per share, or $1 billion, offer.
A special committee of Hollywood's board has separately approved No. 3 Movie Gallery's 13.25 per share, $1.2 billion, cash offer.
Blockbuster, upon its initial offer for Hollywood in December, was ordered Jan. 12 by the FTC to submit additional data from 4,600 company-owned stores related to a variety of issues, including non-pricing terms, incentive programs, membership fees, discounts, late fees and pricing.
Feb. 24, the FTC cited Blockbuster's Feb. 4 response to those information requests as “inaccurate,” thereby negating the previous waiting period for completion of the bid.
Analyst Michael Pachter with Wedbush Morgan Securities in Los Angeles called the FTC action “irrelevant” to Blockbuster's pursuit of Hollywood.
“It shows you that your tax dollars are hard at work supporting petty bureaucracy,” Pachter said.