New York City, Blockbuster said the show wasn’t over. They were right.
The nation’s largest video rental chain stepped up its effort to acquire Hollywood Entertainment, despite a recent agreement for Movie Gallery to acquire Hollywood. Blockbuster made a hostile bid for Hollywood, offering $14.50 per share direct to shareholders—higher than the $13.25 offer from Movie Gallery. If more than half of Hollywood shareholders take the Blockbuster offer, the Movie Gallery merger could be blocked.
Movie Gallery has plans to acquire all of the outstanding shares of Hollywood for $13.25 per share in cash, about $850 million, compared to $985 million from Blockbuster. The Movie Gallery also includes the assumption of some $350 million of Hollywood’s debt. The transaction has a value of $1.2 billion and was expected to be completed during the second quarter of 2005, until the Blockbuster hostile bid. A combined Hollywood and Movie Gallery chain would lead to a player with 4,500 stores and $2.5 billion in revenue—still far behind Blockbuster’s 9,000 worldwide outlets.
Early today, Hollywood Entertainment said its CEO Mark Wattles resigned. Bruce Giesbrecht, president and COO, will replace Wattles. The Wilsonville, Ore.-based chain also advised shareholders to wait for a recommendation by Feb. 17 or sooner, regarding what to do with their shares.