Dallas, Blockbuster has placed an offer to acquire Hollywood Entertainment Corp. for $700 million, a deal that would confirm and enhance Blockbuster’s status as the largest movie-rental company. The deal also comes at a time when Blockbuster has been attempting to keep pace with Netflix and Wal-Mart, its core rivals in the Web-based movie-rental business. However, reports say that Hollywood Entertainment and Blockbuster have yet to discuss the deal.
In addition to the $700 million stock offer, which offers a 17% premium over Wilsonville, Ore.-based Hollywood Entertainment’s closing price of $9.80 on Nov. 10, Blockbuster would reportedly take on debt of about $300 million. In a prepared statement, John Antioco, chairman and chief executive of Blockbuster, said, “We believe this proposed transaction better positions Blockbuster to compete in the rapidly changing home-entertainment marketplace.”
The two companies reportedly attempted to merge roughly five years ago under a plan for a franchise agreement, but later gave up that deal under opposition from the Federal Trade Commission. They may still face the same antitrust concerns, some insiders say. Hollywood Entertainment owns and operates more than 1,920 Hollywood Video superstores and 600 Game Crazy specialty stores. Meanwhile, Blockbuster operates roughly 9,000 stores worldwide.