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02-18-2005, 09:58 AM
Feb 17, 6:21 PM EST
Hollywood Entertainment board rejects Blockbuster hostile bid
By DAVID KOENIG
AP Business Writer
DALLAS (AP) -- The board of Hollywood Entertainment Corp. is telling shareholders they should reject a hostile takeover bid by rival Blockbuster Inc. in favor of a lower offer from Movie Gallery Inc.
The Hollywood board said Thursday there were "uncertainties and possible delays" in the Blockbuster offer that outweigh the higher price that Blockbuster is willing to pay.
Movie Gallery, based in Dothan, Ala., supported the Hollywood board.
"Movie Gallery has already received regulatory approval to proceed with its acquisition of Hollywood, whereas Blockbuster's proposed transaction remains the subject of an investigation by the Federal Trade Commission," Movie Gallery said in a statement.
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Blockbuster is waiting to hear whether the antitrust regulators will let the nation's largest movie-rental company buy the No. 2 chain. Blockbuster argues that the movie-rental market has changed because of competition from retail DVD sales and online services, making a Blockbuster-Hollywood combination less imposing.
Ed Stead, Blockbuster's general counsel, said regulators "have the potential to kill this deal through inaction. We're not going to let them ... they should allow shareholders of Hollywood to decide on the merits of the two offers."
Stead said that if the FTC doesn't act by mid-March, Blockbuster will go ahead with the purchase, forcing the FTC to go to court to block the deal.
Hollywood, based in Wilsonville, Ore., announced last month it had agreed to a purchase by Movie Gallery Inc. for $13.25 per share in cash, or about $900 million.
The Blockbuster offer is for $14.50 per share in cash and stock, or about $985 million.
Movie Gallery, the nation's No. 3 chain, serves a mostly rural market and does not compete directly with the two larger chains in many locations.
Stacey Widlitz, an analyst with Fulcrum Global Partners LLC, predicted that Hollywood shareholders would hold out for the Blockbuster offer.
"Blockbuster is a much better deal, and investors will go where the best offer is," she said. "I don't think (Movie Gallery) will get in a bidding competition with Blockbuster, because they'll lose. It's a much bigger company."
Blockbuster shares fell 14 cents, to $9.08, on the New York Stock Exchange, while shares of Hollywood lost 4 cents, to $13.85. Movie Gallery shares dropped 20 cents, to $21.65, on the Nasdaq Stock Market.
© 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.
Hollywood Entertainment board rejects Blockbuster hostile bid
By DAVID KOENIG
AP Business Writer
DALLAS (AP) -- The board of Hollywood Entertainment Corp. is telling shareholders they should reject a hostile takeover bid by rival Blockbuster Inc. in favor of a lower offer from Movie Gallery Inc.
The Hollywood board said Thursday there were "uncertainties and possible delays" in the Blockbuster offer that outweigh the higher price that Blockbuster is willing to pay.
Movie Gallery, based in Dothan, Ala., supported the Hollywood board.
"Movie Gallery has already received regulatory approval to proceed with its acquisition of Hollywood, whereas Blockbuster's proposed transaction remains the subject of an investigation by the Federal Trade Commission," Movie Gallery said in a statement.
Advertisement
Blockbuster is waiting to hear whether the antitrust regulators will let the nation's largest movie-rental company buy the No. 2 chain. Blockbuster argues that the movie-rental market has changed because of competition from retail DVD sales and online services, making a Blockbuster-Hollywood combination less imposing.
Ed Stead, Blockbuster's general counsel, said regulators "have the potential to kill this deal through inaction. We're not going to let them ... they should allow shareholders of Hollywood to decide on the merits of the two offers."
Stead said that if the FTC doesn't act by mid-March, Blockbuster will go ahead with the purchase, forcing the FTC to go to court to block the deal.
Hollywood, based in Wilsonville, Ore., announced last month it had agreed to a purchase by Movie Gallery Inc. for $13.25 per share in cash, or about $900 million.
The Blockbuster offer is for $14.50 per share in cash and stock, or about $985 million.
Movie Gallery, the nation's No. 3 chain, serves a mostly rural market and does not compete directly with the two larger chains in many locations.
Stacey Widlitz, an analyst with Fulcrum Global Partners LLC, predicted that Hollywood shareholders would hold out for the Blockbuster offer.
"Blockbuster is a much better deal, and investors will go where the best offer is," she said. "I don't think (Movie Gallery) will get in a bidding competition with Blockbuster, because they'll lose. It's a much bigger company."
Blockbuster shares fell 14 cents, to $9.08, on the New York Stock Exchange, while shares of Hollywood lost 4 cents, to $13.85. Movie Gallery shares dropped 20 cents, to $21.65, on the Nasdaq Stock Market.
© 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.