Hollywood Entertainment (NASDAQ:HLYW)
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Hollywood Entertainment Board of Directors Rejects Blockbuster's
Unsolicited Exchange Offer and Reaffirms Previous Recommendation That
Shareholders Vote in Favor of Merger Transaction With Movie Gallery
PORTLAND, Ore., Feb. 17 /PRNewswire-FirstCall/ -- Hollywood Entertainment
Corporation (NASDAQ:HLYW) announced today that its Board of Directors
unanimously recommended that shareholders reject Blockbuster Inc.'s (NYSE: BBI)
unsolicited offer to purchase all of the outstanding shares of Hollywood for
consideration consisting of $11.50 in cash and Blockbuster class A common stock
with a value of $3.00.
Hollywood reported that the Board believes the uncertainties and possible
delays inherent in Blockbuster's offer outweigh the approximately 9.4% premium
being offered by Blockbuster over the consideration of $13.25 in cash per share
to be paid pursuant to an agreement and plan of merger with Movie Gallery
(NASDAQ:MOVI) entered into on January 9, 2005. As a result, after careful
consideration, including its receipt of the unanimous recommendation of a
Special Committee of independent directors, the Board unanimously recommends
that Hollywood shareholders reject the offer and not tender their shares to
Blockbuster.
The Board and Special Committee, in reaching these conclusions, considered,
among other things, that:
* Blockbuster's offer raises significant antitrust issues that cause
substantial uncertainty as to whether the transaction would be allowed
to proceed by the Federal Trade Commission ("FTC") at all or could be
completed without significant delay;
* Blockbuster's offer is subject to numerous conditions which reduce the
likelihood of Blockbuster completing the transaction;
* Blockbuster's offer does not adequately protect Hollywood's shareholders
from, or compensate shareholders for, the numerous risks and conditions
to which the offer is subject; and
* the FTC, on February 11, 2005, permitted the Movie Gallery transaction
to proceed without a request for additional information pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
eliminating the antitrust regulatory hurdle to the Movie Gallery
transaction.
A more complete list of the factors considered by the Board and the Special
Committee is included in a Solicitation/Recommendation Statement on Schedule
14D-9 that was filed by Hollywood with the Securities and Exchange Commission
and mailed to shareholders today. In considering the Blockbuster offer, the
Board and the Special Committee noted that if there were any material positive
developments relating to the offer subsequent to their recommendation and prior
to the shareholder vote on the Movie Gallery transaction, they would reevaluate
their recommendation.
Additionally, the Board reaffirmed its previous recommendation that Hollywood's
shareholders vote in favor of the merger agreement with Movie Gallery.
UBS Investment Bank and Lazard provided financial advice to the Special
Committee in connection with the proposed transaction. Gibson, Dunn & Crutcher
LLP provided legal advice to the Special Committee and Stoel Rives LLP provided
legal advice to Hollywood in connection with these matters.
Additional Information
The proxy statement that Hollywood plans to file with the Securities and
Exchange Commission and mail to its shareholders will contain information about
Hollywood, Movie Gallery, the proposed merger and related matters. Shareholders
are urged to read the proxy statement carefully when it is available, as it
will contain important information that shareholders should consider before
making a decision about the merger. In addition to receiving the proxy
statement and a white proxy card from Hollywood by mail, shareholders will also
be able to obtain the proxy statement, as well as other filings containing
information about Hollywood, without charge, from the SEC's website
(http://www.sec.gov/) or, without charge, from Hollywood. The proxy statement
will also be available from MacKenzie Partners, Inc. by calling (800) 322-2885
toll-free or by email request to: . This announcement is neither a solicitation
of proxy, an offer to purchase nor a solicitation of an offer to sell shares of
Hollywood.
Hollywood and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from Hollywood's shareholders with
respect to the proposed merger. Information regarding any interests that
Hollywood's executive officers and directors may have in the transaction with
Movie Gallery will be set forth in the proxy statement.
DATASOURCE: Hollywood Entertainment Corporation
CONTACT: Daniel Burch, +1-212-929-5748, or Larry Dennedy,
+1-212-929-5239, or Bob Marese, +1-212-929-5405, all of Hollywood
Entertainment Corporation