Blockbuster to Launch Cash Tender Offer for Hollywood Entertainment
28 Dicembre 2004 - 1:00PM
PR Newswire (US)
Blockbuster to Launch Cash Tender Offer for Hollywood Entertainment
Company Reiterates Willingness to Consider Higher Price if
Hollywood Board Cooperates and Allows Review of Financial and Other
Information DALLAS, Dec. 28 /PRNewswire-FirstCall/ -- Blockbuster
Inc. (NYSE:BBINYSE:BBI.B) today announced that it intends to
commence a cash tender offer by mid-January to purchase all of the
outstanding shares of Hollywood Entertainment Corporation
(NASDAQ:HLYW) for $11.50 per share in cash, if Blockbuster is
unable to obtain substantial cooperation from Hollywood's Board of
Directors that is likely to lead to an agreement for an acquisition
of Hollywood by Blockbuster. Importantly, Blockbuster also
reiterated its willingness to consider a higher price if
Hollywood's Board cooperates and if the financial and other
information sought from Hollywood support such an increase.
Blockbuster has not been given access to such Hollywood
information. Following the completion of any tender offer,
Blockbuster intends to acquire any shares not purchased in the
tender at the same per share cash price paid in the tender offer,
pursuant to a merger by a subsidiary of Blockbuster with and into
Hollywood. Blockbuster's proposal represents a substantial premium
over the price provided in the current merger agreement between
Hollywood and the buying group comprised of Leonard Green Partners
and Hollywood's chairman, Mark Wattles, which is valued at $10.25
per share. The total value of the Blockbuster transaction,
including Hollywood's debt, would be approximately $1 billion. The
proposed transaction would be immediately accretive to
Blockbuster's earnings per share and cash flow. "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," said John Antioco, Blockbuster Chairman and CEO.
"Additionally, as we have said before, we believe the proposed
transaction will better position Blockbuster to compete in the
rapidly changing home entertainment marketplace." The tender offer
will be subject to customary conditions, including the expiration
or termination of the applicable waiting period under the Hart-
Scott-Rodino Antitrust Improvements Act ("HSR"), the termination of
Hollywood's existing merger agreement for the Leonard Green
Partners transaction, certain actions to ensure that the Oregon
control share acquisition statute and business combination statute
are not applicable to Blockbuster following the tender offer, and
the receipt of funds under Blockbuster's financing arrangements
that are being put in place for the tender offer. Blockbuster
believes it should obtain the necessary regulatory approvals to
complete the transaction expeditiously and intends to quickly make
its necessary filings under HSR. "Blockbuster believes that this
proposed acquisition is pro-competitive," said Antioco. "In recent
years, the home entertainment landscape has broadened considerably.
Blockbuster today faces strong competitive challenges from the
aggressive sale of DVDs by mass merchants and online retailers, as
well as increasing penetration by premium cable and satellite
services. Additionally, we believe the strength of competition from
these and other emerging sources, such as video-on-demand and
computer downloading, is likely to increase significantly in the
future." Blockbuster believes the combination with Hollywood will
allow it to provide a better overall customer experience.
Blockbuster has taken important steps to deal with increasing
competition by expanding its in-store offerings to include movie
and game trading, store-in-store game boutiques, and an increased
retail selection of both new and used movies and games. The Company
has also begun giving consumers new ways to rent through in-store
movie, in- store game and online DVD rental subscription programs,
which offer no due dates, no late fees and an unlimited number of
movie and game rentals, up to three at a time, depending on the
program, for one low monthly fee. Additionally, Blockbuster
recently reduced its online rental program to $14.99 per month and,
in a groundbreaking move, eliminated late fees for all U.S.
company-operated stores as of Jan. 1, 2005. As a result of the
elimination of late fees, which in effect decreases its rental
prices, Blockbuster previously announced its plans to reduce 2005
capital expenditures through fewer store openings and remodels. An
acquisition of Hollywood would allow Blockbuster to immediately
accelerate its plans to bring its expanded array of offerings to
more consumers through an accretive acquisition of stores.
Blockbuster has retained Citigroup, Credit Suisse First Boston and
JPMorgan to act as financial advisors for the transaction and has
received a financing commitment from JPMorgan, Credit Suisse First
Boston and Citigroup for the funds necessary to complete the tender
offer, as described. THIS PRESS RELEASE IS FOR INFORMATIONAL
PURPOSES ONLY AND IS NOT AN OFFER TO BUY OR THE SOLICITATION OF AN
OFFER TO SELL ANY SHARES. A SOLICITATION OR OFFER TO BUY
HOLLYWOOD'S COMMON STOCK MAY BE MADE, IF AT ALL, PURSUANT TO A
TENDER OFFER STATEMENT, AN OFFER TO PURCHASE AND RELATED MATERIALS.
HOLLYWOOD SHAREHOLDERS SHOULD READ THE TENDER OFFER STATEMENT, THE
OFFER TO PURCHASE AND ANY RELATED MATERIALS CAREFULLY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION,
INCLUDING THE TERMS AND CONDITIONS OF ANY OFFER. HOLLYWOOD
SHAREHOLDERS WILL BE ABLE TO OBTAIN THE TENDER OFFER STATEMENT, THE
OFFER TO PURCHASE AND RELATED MATERIALS WITH RESPECT TO ANY TENDER
OFFER, IF APPLICABLE, FREE AT THE SEC'S WEBSITE AT WWW.SEC.GOV OR
FROM BLOCKBUSTER INC. AT WWW.BLOCKBUSTER.COM . HOLLYWOOD
SHAREHOLDERS ARE URGED TO READ ANY PROXY STATEMENT REGARDING THE
PROPOSED TRANSACTION IF AND WHEN IT BECOMES AVAILABLE BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. BLOCKBUSTER AND ITS DIRECTORS
AND EXECUTIVE OFFICERS MAY BE DEEMED TO BE PARTICIPANTS IN THE
SOLICITATION OF PROXIES IN RESPECT OF THE PROPOSED TRANSACTION
BETWEEN HOLLYWOOD AND BLOCKBUSTER. HOLLYWOOD SHAREHOLDERS WILL BE
ABLE TO OBTAIN A COPY OF ANY PROXY STATEMENT, AS WELL AS OTHER
FILINGS CONTAINING INFORMATION ABOUT THE PARTIES (INCLUDING
INFORMATION REGARDING THE PARTICIPANTS IN THE PROXY SOLICITATION
AND A DESCRIPTION OF THEIR DIRECT AND INDIRECT INTERESTS, BY
SECURITY HOLDINGS OR OTHERWISE), FREE AT THE SEC'S WEBSITE AT
WWW.SEC.GOV OR FROM BLOCKBUSTER AT WWW.BLOCKBUSTER.COM . This news
release contains forward-looking statements relating to
Blockbuster's interest in acquiring Hollywood Entertainment
Corporation including its intention to commence a cash tender offer
for shares of Hollywood. Specific forward-looking statements relate
to the anticipated terms of and matters relating to the tender
offer and its financing, the anticipated impact of the transaction
on Blockbuster's financial results, the anticipated benefits to
Blockbuster's and Hollywood's shareholders that could result from
the transaction and matters related to Blockbuster's operations
including any reduction of capital expenditures on store openings
and remodels, integration of any online offering with stores and
further expansion of services. These forward-looking statements are
based on Blockbuster's current intent, expectations, estimates and
projections and are not guarantees of future performance. These
statements involve risks, uncertainties, assumptions and other
factors that are difficult to predict and that could cause actual
results to vary materially from those expressed in or indicated by
them. In addition, some factors are beyond Blockbuster's control.
Certain of the statements made in this release are contingent upon
receipt of cooperation from Hollywood's board of directors and the
completion of the proposed acquisition discussed above. Blockbuster
can give no assurance that the proposed acquisition, including the
tender offer, will be completed. Other factors that could cause
actual results to differ materially from the statements made in
this release include, among others: (i) Blockbuster's and
Hollywood's ability to receive all necessary approvals, including
any necessary governmental or regulatory approvals and the approval
of the respective Board's of Directors and stockholders, if
applicable; (ii) Blockbuster's ability to close the financing
necessary for the tender offer; (iii) changes to Blockbuster's
strategy, business plan and pricing model, including its plans
regarding use of capital and any related impact on Blockbuster's
offer price; (iv) consumer demand for Blockbuster's planned product
and service offerings; (v) the variability in consumer appeal of
the movie titles and games software released from rental and sale;
(vi) Blockbuster's ability to respond to changing consumer
preferences and to effectively adjust its product mix, service
offerings and marketing and merchandising initiatives; (vii)
Blockbuster's ability to successfully integrate Hollywood's
operations with its own upon completion of the proposed
acquisition; (viii) Blockbuster's ability to timely implement and
maintain the necessary information technology systems and
infrastructure to support shifts in consumer preferences and any
corresponding changes to Blockbuster's operating model, including
changes related to the proposed transaction; (ix) the extent and
timing of Blockbuster's continued investment of incremental
operating expenses and capital expenditures to continue to develop
and implement its initiatives; (x) vendor determinations relating
to pricing and distribution of their product and Blockbuster's
ability to reach agreements with service, product and content
providers on acceptable commercial terms; and (xi) other factors as
described in filings with the Securities and Exchange Commission,
including the detailed factors discussed under the heading
"Cautionary Statements" in Blockbuster's annual report on Form 10-K
for the fiscal year ended December 31, 2003 and discussed under the
heading "Disclosure Regarding Forward-Looking Information" in
Blockbuster's quarterly report on Form 10-Q for the fiscal quarter
ended September 30, 2004. As of the date of this press release,
Blockbuster beneficially owns 1,000 shares of Hollywood common
stock, in order to give Blockbuster certain stockholder rights
under Oregon law. DATASOURCE: Blockbuster Inc. CONTACT: press,
Karen Raskopf, Senior Vice President, Corporate Communications,
+1-214-854-3190, or analysts-investors, or Mary Bell, Senior Vice
President, Investor Relations, +1-214-854-3863, or Angelika Torres,
Director, Investor Relations, +1-214-854-4279, all of Blockbuster
Inc. Web site: http://www.blockbuster.com/
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