Blockbuster Inc. said today (Dec. 28) that it intends to acquire rival rental chain Hollywood by mid-January if it does not obtain cooperation from Hollywood’s board of directors.
Blockbuster says it will launch a cash offer to purchase all of Hollywood’s outstanding shares for $11.50 per share, in addition to Hollywood’s $300 million debt. The deal is valued at $1 billion.
Blockbuster says it would consider paying a higher price if it receives cooperation from Hollywood’s board and obtains certain financial information it is seeking that Hollywood has refused to provide.
A Hollywood representative could not be reached.
As previously reported, Blockbuster first set its sights on Hollywood in November, announcing that it would pay $700 million for the chain. Another rental chain, Movie Gallery, announced its own bid for Hollywood for an undisclosed sum on Nov. 19.
Hollywood in March 2004 agreed to merge with investment firm Leonard Green Partners; in October, Hollywood chairman Mark Wattles agreed to be part of the partnership. That deal is valued at $10.25 a share.
Hollywood stock closed today up seven cents at $13.16. Blockbuster was down six cents at $9.33.
“We believe that the proposal Blockbuster is prepared to make is clearly in the best interests of Hollywood and Blockbuster shareholders as well as consumers,” says John Antioco, chairman/CEO of Blockbuster in a statement. “We believe the proposed transaction will better position Blockbuster to compete in the rapidly changing home entertainment marketplace.”