Hollywood Entertainment (NASDAQ:HLYW)
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Hollywood Entertainment Corporation Signs Definitive Merger
Agreement With Movie Gallery, Inc.; Shareholders to Receive $13.25 Per Share in
Cash
PORTLAND, Ore., Jan. 10 /PRNewswire-FirstCall/ -- Hollywood Entertainment
Corporation (NASDAQ:HLYW), owner and operator of more than 2000 Hollywood Video
superstores and more than 700 Game Crazy departments, today announced the
signing of a definitive merger agreement to be acquired by Movie Gallery, Inc.
(NASDAQ:MOVI).
Under the terms of the merger agreement with Movie Gallery, Hollywood's
shareholders will be entitled to receive $13.25 per share in cash at closing.
Hollywood's entry into the merger agreement with Movie Gallery occurred at the
conclusion of an auction process led by a Special Committee of Hollywood's
Board of Directors comprised of all of the independent directors of
Hollywood's Board of Directors, during which the Special Committee solicited
interest among a broad range of potential corporate and financial buyers. The
auction process was conducted during the period following the execution of the
October 13, 2004 amended and restated merger agreement with Carso Holdings
Corporation, an affiliate of Leonard Green & Partners, L.P., the terms of which
expressly allowed Hollywood to solicit alternative transactions. Under the
terms of the merger agreement with Carso, Hollywood's shareholders were to
receive $10.25 per share in cash. The $13.25 per share price to be received by
Hollywood's shareholders under the terms of the merger agreement with Movie
Gallery represents a 30% premium over the $10.25 price negotiated with Carso.
Hollywood terminated its merger agreement with Carso and entered into the
merger agreement with Movie Gallery following a unanimous recommendation in
favor of such actions by the Special Committee. The termination of the merger
agreement with Carso will require a payment by Hollywood of Carso's transaction
expenses up to a maximum of $4 million, but will not require payment by
Hollywood of a termination fee.
UBS Investment Bank acted as financial advisor to the Special Committee in
connection with the proposed transaction and the Special Committee and the
Board of Directors received a fairness opinion from Lazard on the Movie Gallery
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.
The closing of the Movie Gallery transaction is subject to certain terms and
conditions customary for transactions of this type, including receipt of
shareholder approval, antitrust clearance and the completion of financing.
Hollywood will solicit shareholder approval by means of a proxy statement,
which will be mailed to Hollywood's shareholders upon the completion of the
required Securities and Exchange ("SEC") Commission filing and review process.
The financing necessary for the transaction has been committed by Wachovia
Bank, National Association and Merrill Lynch & Co. The parties currently
anticipate consummating the transaction in the second quarter of 2005.
Additional Information
Hollywood will promptly file with the SEC a current report on form 8-K, which
will include the merger agreement and related documents. The proxy statement
that Hollywood plans to file with the SEC 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.
Forward-Looking Statements
This press release contains various "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 regarding the
proposed transaction between Hollywood and Movie Gallery and involving risks
and uncertainties related to the occurrence of future events. These
forward-looking statements are based on management's current expectations,
assumptions, estimates and projections about the current economic environment,
Hollywood and its industry. Certain factors that could cause actual events not
to occur as expressed in the forward-looking statement include, but are not
limited to, (i) the failure to obtain the necessary antitrust clearance,
shareholder approval or required financing in a timely manner or at all and
(ii) satisfaction of various other closing conditions contained in the
definitive merger agreement. Other potential risks and uncertainties are
discussed in Hollywood 's reports and other documents filed with the SEC from
time to time. Hollywood assumes no obligation to update the forward-looking
information. Such forward-looking statements are based upon many estimates and
assumptions and are inherently subject to significant economic and competitive
uncertainties and contingencies, many of which are beyond the control of the
Company's management. Inclusion of such forward-looking statements herein
should not be regarded as a representation by Hollywood that the statements
will prove to be correct.
DATASOURCE: Hollywood Entertainment Corporation
CONTACT: Investors/Media Contacts: MacKenzie Partners, Inc., Daniel
Burch, +1-212-929-5748, or Larry Dennedy, +1-212-929-5239, or Bob Marese,
+1-212-929-5405