[Article] Blockbuster to buy Hollywood Video for 1 Billion Dollars!

Squeeky · 2004-11-12, 05:23 AM

Go go gadget monopoly

gg incorporating $300,000,000 in debt from Hollywood Video too. I guess that's the price to pay to monopolize the video rental industry.

Blockbuster bids for Hollywood Entertainment
Video chain offer tops other suitor's $10.25-a-share deal

NEW YORK (CBS.MW) -- Blockbuster Inc. joined the bidding Thursday to acquire Hollywood Entertainment, its smaller rival, offering $1 billion to close a deal that would broaden its standing as the world's largest movie rental company.

Dallas-based Blockbuster (BBI: news, chart, profile) said it would pay $11.50 a share, or $700 million in cash, for Hollywood Entertainment (HLYW: news, chart, profile), a 17 percent premium over the stock's value before the deal was announced.

Blockbuster's proposal would top an offer from a group of private investors led by Leonard Green & Partners, which has bid $10.25 a share, reduced from a previous offer of $14 a share.

On Wall Street after the news, shares of Hollywood Entertainment jumped $1.35, or nearly 14 percent, to $11.15. Blockbuster rose 82 cents, or 11 percent, to $8.20.

Blockbuster would also assume about $300 million in debt from Hollywood Entertainment, which is based in Wilsonville, Ore.

Analysts were surprised by Blockbuster's move and some questioned the decision to try to acquire its competitor instead of gaining strength in other brands.

"Why buy into an industry that is clearly suffering when the trend is not in brick-and-mortar?" asked analyst Marla Backer of Research Associates. "There is a much better use for Blockbuster's capital than for it to acquire a company which has the same challenges that it has. Blockbuster should be diversifying its portfolio and looking at the video-games business."

Hollywood Entertainment owns and operates more than 1,920 Hollywood Video superstores as well as 600 Game Crazy specialty stores. Blockbuster, a unit of Viacom Inc. (VIA: news, chart, profile) (VIA.B: news, chart, profile), has about 9,000 stores worldwide.

The video rental business has lost much of its luster in recent years, while also growing vulnerable to the coming wave of video-on-demand services that can be obtained on cable TV and personal computers at home.

Video stores' prospects have dimmed over the years as cable TV expanded customers' ability to order films and rivals such as Netflix (NFLX: news, chart, profile) set up DVD mail service with online ordering.

Last year, Viacom CEO Sumner Redstone said that Blockbuster was no longer a core asset. Viacom is a significant investor in MarketWatch Inc., the publisher of this report.

A committee of Hollywood Entertainment's board that assessed Leonard Green's offer said Oct. 14 that it would continue to seek competing offers. An analysis by Lazard Freres evaluated the Hollywood Entertainment enterprise value at about $809 million, according to an Oct. 27 SEC filing.

Hollywood said it expected $1 billion would be needed to complete the transaction, which involved a tender offer for senior subordinated notes. The LGP offer has a Feb. 28, 2005, termination date and a $4 million fee if the deal falls apart.

On Oct. 26, Dolphin Limited Partnership, which said it owned 1.9 million Hollywood shares, expressed doubts about the Leonard Green group winning the bidding.

Blockbuster said that while it has conveyed its interest to Hollywood Entertainment, there hasn't been a serious round of negotiations.

"We believe this proposed transaction better positions Blockbuster to compete in the rapidly changing home entertainment marketplace, while simultaneously benefiting consumers as well as Blockbuster and Hollywood Entertainment shareholders," said John Antioco, Blockbuster chairman and chief executive.

Fragmatic · 2004-11-12, 05:36 AM

Blockbuster suck.

They bought Gamestation, which was the fucking best place ever to buy games. They were so damn cheap, but now they're expensive. I am angsty.

TotalBiscuit · 2004-11-12, 09:27 AM

Originally Posted by Fragmatic

Blockbuster suck.

They bought Gamestation, which was the fucking best place ever to buy games. They were so damn cheap, but now they're expensive. I am angsty.

That was them?

Ok now I hate them. The trade-in prices have gone through the floor, the games are far more expensive. I'm back on Play and Ebay :|

TB.

Ivan · 2004-11-12, 09:30 AM

Family Video for the win! I love Family Video so much better than BlockBuster.

Hamma · 2004-11-12, 09:44 AM

I don't even rent videos or games anymore. People who rent games and vids always treat them like shit. You get a CD there and it looks like some 2 year old used it as a toy, or his mom used it as a coaster.

TotalBiscuit · 2004-11-12, 09:46 AM

My DVD drive is the most tolerant thing ever. Even if a dvd is scratched to buggery it'll still play nicely.

I've been using internet rental for a while now and the dvds tend to come in great condition.

TB.

JetRaiden · 2004-11-12, 11:14 AM

fuck...Im on Blockbuster's wanted list for an outstanding copy of like Syphon Filter for PS1 or something....if Hollywood Video closes, Im pretty fucked. local rental places suck.

DaShiznit · 2004-11-12, 11:17 AM

I only use Blockbuster as a last resort. Man this suxxorz.

AztecWarrior · 2004-11-12, 02:56 PM

The only solution is a mass Molotov Cocktail attack on all Blockbusters in your neighborhood.

I mean, they didn't even stock Soylent Green, but they had around 9000 copies of Bad Boyz II or The Matrix: Reloaded.

Fragmatic · 2004-11-12, 03:47 PM

Apollo or VidBiz for the win.

Strygun · 2004-11-12, 04:44 PM

Movie Gallery, if I rent at all.

MattxMosh · 2004-11-12, 04:47 PM

People still rent movies?

DVD s are so cheap its near pointless to rent.

Video Games on the other hand, cost more, and it sucks to buy a game that turns out to be 12 hours long.

So, In conclusion, Boycott blockbuster, and start stealing video games.

Wait, that came out wrong...

Red October · 2004-11-12, 04:54 PM

I'm surprised they had the dough laying around to purchase Hollywood Video. The retail video rental market has taken some pretty big hits as of late. If you have On Demand with your Satellite or Cable Company, why go to the video store? Its usually a buck cheaper and you can record it. Plus, If you spend more than 20 bucks a month on video rentals, you may as well go to NetFlix or other online video store. Kill the late fees and don't have to worry about forgetting to drop off the video/dvd.

Biohazzard56 · 2004-11-12, 04:58 PM

This is somewhat funny considering there is a Blockbuster right across the street from Hollywood Video in my town.

TotalBiscuit · 2004-11-12, 09:28 PM

Originally Posted by MattxMosh

People still rent movies?

DVD s are so cheap its near pointless to rent.

Video Games on the other hand, cost more, and it sucks to buy a game that turns out to be 12 hours long.

So, In conclusion, Boycott blockbuster, and start stealing video games.

Wait, that came out wrong...

My online rental service sends me 3 dvds a week and costs �3.99 (a week).

To buy those same DVDs would cost around �40.

TB.