Hollywood Entertainment (NASDAQ:HLYW)
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Movie Gallery Issues Statement Regarding Hollywood Merger
DOTHAN, Ala., Feb. 17 /PRNewswire-FirstCall/ -- Movie Gallery, Inc.
(NASDAQ:MOVI) today issued the following statement in response to the
announcement that the Special Committee and Board of Directors of Hollywood
Entertainment (NASDAQ:HLYW) rejected the Blockbuster, Inc. (NYSE:BBI) exchange
offer and reaffirmed their earlier recommendation that all Hollywood
shareholders vote to approve the previously announced definitive merger
agreement with Movie Gallery.
We are pleased that Hollywood's Board of Directors has rejected the
exchange offer proposed by Blockbuster and reaffirmed its recommendation
that Hollywood shareholders vote to approve the merger with Movie
Gallery. We concur with its recommendations, and we continue to believe
that our pending merger is the best option for Hollywood's shareholders,
employees and customers. Movie Gallery has already received regulatory
approval to proceed with its acquisition of Hollywood, whereas
Blockbuster's proposed transaction remains the subject of an
investigation by the Federal Trade Commission. For this reason, we
believe that our all-cash acquisition of Hollywood offers greater closing
certainty and will deliver concrete value to Hollywood shareholders.
Mr. Page Todd, Executive Vice President and General Counsel of Movie Gallery,
Inc., added, "Blockbuster's highly conditional proposal is predicated on an
unrealistic and unsubstantiated market definition. Blockbuster has argued
publicly that the competition is national in scope and that its competitors
include mass merchants and new technologies. Movie Gallery is not aware of any
instance in which a rentailer has shut down a store or been forced to lower
prices due to a mass merchant opening in its market or the introduction of a
subscription service or new cable offering. Furthermore, in the video-rental
business the competition is very local in nature. It is perfectly obvious that
Blockbuster's closest competitor is Hollywood, not Wal- Mart, not Netflix, and
not pay-per-view or video-on-demand, and for this reason we expect the FTC to
obtain an injunction preventing Blockbuster from proceeding with its
unsolicited hostile takeover attempt."
About Movie Gallery
Movie Gallery, Inc. is the third-largest company in the specialty video retail
industry based on revenues and the second-largest in the industry based on
stores. As of December 31, 2004, Movie Gallery owned and operated 2,482 stores
located primarily in the rural and secondary markets throughout North America.
Since the company's initial public offering in August 1994, Movie Gallery has
grown from 97 stores to its present size through acquisitions and new store
openings.
Forward-Looking Statements
This news release contains forward-looking statements relating to Movie
Gallery's intent to acquire Hollywood Entertainment. Specific forward-looking
statements relate to Movie Gallery's expectations regarding the potential
benefits of such transaction, including the anticipated benefits to Hollywood's
shareholders, employees and customers. 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. Certain 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) matters related to closing conditions contained in the merger
agreement between Movie Gallery and Hollywood, including approval of the
Hollywood shareholders and conditions to the consummation of the financing
contemplated by the merger agreement; and (ii) 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 DEFINITIVE 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 definitive proxy statement, as well as other filings containing
information about the parties, without charge, at the Securities and Exchange
Commission's Internet site ( http://www.sec.gov/ ). Copies of the definitive
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 and other persons may be
deemed to be participants in the solicitation of proxies in respect of the
transaction. Information regarding Hollywood's directors and executive
officers will be available in the definitive 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 definitive proxy statement and other
relevant materials to be filed with the SEC when they become available.
Contact: Financial: Thomas Johnson
(334) 702-2400
Media: Andrew Siegel
(212) 895-8627
DATASOURCE: Movie Gallery, Inc.
CONTACT: Financial, Thomas Johnson, +1-334-702-2400, or Media, Andrew
Siegel, +1-212-895-8627, both of Movie Gallery, Inc.
Web site: http://www.moviegallery.com/