Movie Gallery to Acquire Hollywood Entertainment for $13.25 Per Share in Cash
10 Gennaio 2005 - 1:07PM
PR Newswire (US)
Movie Gallery to Acquire Hollywood Entertainment for $13.25 Per
Share in Cash Combination Creates 2nd Largest Rentailer in North
America with Approximately $2.5 Billion in Revenues and 4,500
Stores DOTHAN, Ala., Jan. 10 /PRNewswire-FirstCall/ -- Movie
Gallery, Inc. (NASDAQ:MOVI) today announced that it has entered
into a definitive merger agreement with Hollywood Entertainment
Corporation (NASDAQ:HLYW) under which Movie Gallery will acquire
all of the outstanding shares of Hollywood for $13.25 per share in
cash or approximately $850 million. Under the terms of the
agreement, which was unanimously approved by Movie Gallery's board
of directors, Movie Gallery will also assume approximately $350
million of Hollywood's debt. The transaction has a value of $1.2
billion and is expected to be completed during the second quarter
of 2005. Movie Gallery expects the transaction to be immediately
accretive to its earnings per share. The combined company will be
the second largest North American video rental company with annual
revenue of approximately $2.5 billion and approximately 4,500
stores located in all 50 U.S. states, Canada and Mexico. Joe
Malugen, Movie Gallery's Chairman, President and Chief Executive
Officer, said, "This transformational merger creates a leading
North American rentailer with outstanding prospects for future
growth. With a broader geographic presence and greatly improved
distribution capabilities and scale, our combined company will be a
strong competitor, well-positioned for continued success in urban,
suburban and rural markets. Mr. Malugen continued, "We are proud of
our successful track record of integrating acquisitions, including
more than 200 companies purchased over the last ten years. We
believe this combination with Hollywood presents an outstanding
opportunity to enhance value for shareholders, create new career
opportunities for employees and associates of both companies and
expand our presence to better serve customers and the communities
in which we operate." Mr. Malugen, will serve as Chairman,
President and Chief Executive Officer of the combined company
following completion of the merger. Movie Gallery will remain
headquartered in Dothan, Alabama, and Hollywood Entertainment will
remain headquartered in Wilsonville, Oregon. Hollywood will become
a subsidiary of Movie Gallery and will continue to operate under
the Hollywood brand name. The merger is conditioned, among other
things, upon the approval of Hollywood's shareholders and customary
regulatory approvals and the receipt by Movie Gallery of sufficient
financing. Wachovia Bank and Merrill Lynch & Co. have committed
to provide the necessary financing to consummate this all cash
transaction. The company noted that, with respect to the regulatory
approval process, there is very little overlap between its and
Hollywood's store locations. Merrill Lynch & Co. and Wachovia
Securities, Inc. acted as financial advisors, and Alston & Bird
LLP and Troy & Gould PC acted as legal counsel to Movie
Gallery. About Movie Gallery Movie Gallery currently owns and
operates more than 2,475 video specialty stores located throughout
North America. Movie Gallery is the leading home video specialty
retailer focused on the suburban and rural markets. FORWARD LOOKING
STATEMENT This news release contains forward-looking statements
relating to Movie Gallery's intent to acquire Hollywood
Entertainment Corporation. Specific forward-looking statements
relate to Movie Gallery's expectations regarding the potential
benefits of such transaction, including (i) the anticipated
benefits to Movie Gallery's and Hollywood's stockholders, employees
and customers and (ii) the competitive advantages that could result
from the transaction. These forward-looking statements are based on
Movie Gallery'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 Movie Gallery's control.
The statements made in this release are contingent upon completion
of the proposed transaction. Other factors that could cause actual
results to differ materially from the statements made in this
release include, among others: (i) Movie Gallery's and Hollywood's
ability to receive all necessary approvals, including any necessary
governmental or regulatory approvals and the approval of the
Hollywood stockholders, if applicable; (ii) changes to Movie
Gallery's strategy and business plan, including its plans regarding
use of capital; (iii) consumer demand for Movie Gallery's planned
product and service offerings; (iv) the variability in consumer
appeal of the movie titles and games software released for rental
and sale; (v) Movie Gallery's ability to respond to changing
consumer preferences and to effectively adjust its product mix,
service offerings and marketing and merchandising initiatives; (vi)
Movie Gallery'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 Movie Gallery's operating model, including changes
related to the proposed transaction; (vii) the extent and timing of
Movie Gallery's continued investment of incremental operating
expenses and capital expenditures to continue to develop and
implement its initiatives; (viii) vendor determinations relating to
pricing and distribution of their product and Movie Gallery's
ability to reach agreements with service, product and content
providers on acceptable commercial terms; and (ix) other factors as
described in Movie Gallery's filings with the Securities and
Exchange Commission, including the detailed factors discussed under
the heading "Cautionary Statements" in Movie Gallery's annual
report on Form 10-K for the fiscal year ended January 4, 2004.
HOLLYWOOD STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT
REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE,
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be
able to obtain a free copy of the proxy statement, as well as other
filings containing information about the parties, without charge,
at the SEC's Internet site (http://www.sec.gov/). Copies of the
proxy statement and the filings with the SEC that will be
incorporated by reference in the proxy statement will also be
available, without charge, by directing a request to Hollywood
Entertainment Corp., 9275 S.W. Peyton Lane, Wilsonville, Oregon
97070, Attn: Investor Relations. The directors and executive
officers of Hollywood Entertainment and other persons may be deemed
to be participants in the solicitation of proxies in respect of the
proposed transaction. Information regarding Hollywood
Entertainment's directors and executive officers will be available
in the proxy statement. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the proxy statement and other relevant
materials to be filed with the SEC if and when they become
available. Contact: Thomas D. Johnson, Jr. SVP - Corporate Finance
and Business Development (334) 702-2400 DATASOURCE: Movie Gallery,
Inc. CONTACT: Thomas D. Johnson, Jr., SVP, Corporate Finance and
Business Development, Movie Gallery, Inc., +1-334-702-2400 Web
site: http://www.moviegallery.com/
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