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Hollywood Video To Go Private

29 Mar, 2004 By: Holly J. Wagner

Hollywood Entertainment Corp.'s management will take the company private in a deal with private investors worth $890 million, the company announced today.

Hollywood's shareholders will receive $14 per share in cash, more than 30 percent -- above the most recent closing price of $10.70 and a premium of more than 25 percent to the average trading price for the last 30 days – in the deal with an affiliate of Leonard Green & Partners, L.P. Chairman and CEO Mark Wattles will retain those titles after the merger is completed and will exchange “a substantial portion” of his holdings in the existing company for 50 percent of the common equity in the surviving company.

The transaction is subject to shareholder approval, receipt of antitrust clearance and of financing. Hollywood will send shareholders a proxy statement seeking their approval after the Securities and Exchange Commission (SEC) gives its nod. The parties anticipate completing the transaction in the third calendar quarter. The equity financing necessary for the transaction has been fully committed by Leonard Green & Partners, L.P., through Green Equity Investors IV, L.P., a $1.85 billion private equity fund, and the debt financing necessary for the transaction has been fully committed by UBS AG.

Leonard Green & Partners is a private Los Angeles-based merchant banking firm specializing in organizing, structuring and sponsoring management buyouts, going-private transactions and recapitalizations of public and private companies.

The deal followed a unanimous recommendation by a special committee comprising the independent directors of the company's board, which received a fairness opinion from Lazard.

Hollywood owns more than 1,920 Hollywood Video superstores and 600 Game Crazy specialty stores.

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