Blockbuster Drops Takeover Bid for Hollywood Entertainment
Dallas, Blockbuster Entertainment Inc. today said it has dropped its bid for rival Hollywood Entertainment Corp. Hollywood Entertainment, the No. 2 video retailer after Blockbuster, resisted the bid because of likely opposition from the Federal Trade Commission (FTC). Hollywood’s board has instead accepted the FTC-approved sale to Dothan, Ala.-based Movie Gallery Inc., the third-biggest industry player. Blockbuster had offered $14.50 per share in cash and stock, while Movie Gallery proposed $13.25 per share in cash, a deal worth $850 million.
“Our decision not to extend our offer was reached after a careful review of all the available facts and circumstances,” John Antioco, chairman and CEO of Blockbuster, said in a statement.
The FTC had blocked a Blockbuster-Hollywood deal in 1999 on grounds that the merger would have given the combined entity too much pricing power. Blockbuster officials said they dropped their bid in part because of the unlikelihood of obtaining FTC clearance in a timely way, according to reports.