Blockbuster has raised the ante for rival movie-rental chain Hollywood Entertainment, launching a hostile takeover bid that it hopes will...
DALLAS — Blockbuster has raised the ante for rival movie-rental chain Hollywood Entertainment, launching a hostile takeover bid that it hopes will derail Hollywood’s pending sale to Movie Gallery.
Dallas-based Blockbuster, the nation’s largest movie-rental chain, said yesterday that it offered $14.50 a share in cash and stock for No. 2 Hollywood, or about $985 million based on Hollywood’s outstanding shares and options.
Movie Gallery, the nation’s third-largest movie-rental company, had agreed last month to pay $13.25 cash a share, or about $900 million. Both suitors promise to assume $350 million in Hollywood debt.
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Hollywood, based in Wilsonville, Ore., has rejected Blockbuster’s advances over the past several months, including an offer of $11.50 a share in cash.
Blockbuster’s new hostile tender offer would begin tomorrow and run through March 11 and consist of $11.50 in cash and $3 in its own stock for each Hollywood share.
Analysts said Dothan, Ala.-based Movie Gallery could argue that its offer is still superior because Blockbuster might have more difficulty winning approval for a deal from antitrust regulators. Blockbuster said yesterday that it had received a request for more information on its proposal from the Federal Trade Commission.
“I’m sure Hollywood shareholders would have preferred all cash” from Blockbuster, said Arvind Bhatia, an analyst with Southwest Securities. “I don’t think this is the last word. There is more to come.”
Dennis McAlpine, an analyst for McAlpine Associates, said Movie Gallery could counter Blockbuster’s offer or hope that the FTC sinks Blockbuster’s bid.
Officials for Hollywood and Movie Gallery did not immediately return calls for comment.