Hollywood Entertainment (NASDAQ:HLYW)
Historical Stock Chart
From Jun 2019 to Jun 2024
![Click Here for more Hollywood Entertainment Charts. Click Here for more Hollywood Entertainment Charts.](/p.php?pid=staticchart&s=N%5EHLYW&p=8&t=15)
Movie Gallery to Acquire Hollywood Entertainment for $13.25 Per
Share in Cash
Combination Creates 2nd Largest Rentailer in North America with Approximately
$2.5 Billion in Revenues and 4,500 Stores
DOTHAN, Ala., Jan. 10 /PRNewswire-FirstCall/ -- Movie Gallery, Inc.
(NASDAQ:MOVI) today announced that it has entered into a definitive merger
agreement with Hollywood Entertainment Corporation (NASDAQ:HLYW) under which
Movie Gallery will acquire all of the outstanding shares of Hollywood for
$13.25 per share in cash or approximately $850 million. Under the terms of the
agreement, which was unanimously approved by Movie Gallery's board of
directors, Movie Gallery will also assume approximately $350 million of
Hollywood's debt. The transaction has a value of $1.2 billion and is expected
to be completed during the second quarter of 2005. Movie Gallery expects the
transaction to be immediately accretive to its earnings per share.
The combined company will be the second largest North American video rental
company with annual revenue of approximately $2.5 billion and approximately
4,500 stores located in all 50 U.S. states, Canada and Mexico. Joe Malugen,
Movie Gallery's Chairman, President and Chief Executive Officer, said, "This
transformational merger creates a leading North American rentailer with
outstanding prospects for future growth. With a broader geographic presence
and greatly improved distribution capabilities and scale, our combined company
will be a strong competitor, well-positioned for continued success in urban,
suburban and rural markets.
Mr. Malugen continued, "We are proud of our successful track record of
integrating acquisitions, including more than 200 companies purchased over the
last ten years. We believe this combination with Hollywood presents an
outstanding opportunity to enhance value for shareholders, create new career
opportunities for employees and associates of both companies and expand our
presence to better serve customers and the communities in which we operate."
Mr. Malugen, will serve as Chairman, President and Chief Executive Officer of
the combined company following completion of the merger. Movie Gallery will
remain headquartered in Dothan, Alabama, and Hollywood Entertainment will
remain headquartered in Wilsonville, Oregon. Hollywood will become a
subsidiary of Movie Gallery and will continue to operate under the Hollywood
brand name.
The merger is conditioned, among other things, upon the approval of Hollywood's
shareholders and customary regulatory approvals and the receipt by Movie
Gallery of sufficient financing. Wachovia Bank and Merrill Lynch & Co. have
committed to provide the necessary financing to consummate this all cash
transaction. The company noted that, with respect to the regulatory approval
process, there is very little overlap between its and Hollywood's store
locations.
Merrill Lynch & Co. and Wachovia Securities, Inc. acted as financial advisors,
and Alston & Bird LLP and Troy & Gould PC acted as legal counsel to Movie
Gallery.
About Movie Gallery
Movie Gallery currently owns and operates more than 2,475 video specialty
stores located throughout North America. Movie Gallery is the leading home
video specialty retailer focused on the suburban and rural markets.
FORWARD LOOKING STATEMENT
This news release contains forward-looking statements relating to Movie
Gallery's intent to acquire Hollywood Entertainment Corporation. Specific
forward-looking statements relate to Movie Gallery's expectations regarding the
potential benefits of such transaction, including (i) the anticipated benefits
to Movie Gallery's and Hollywood's stockholders, employees and customers and
(ii) the competitive advantages that could result from the transaction. 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. The 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) Movie Gallery's and
Hollywood's ability to receive all necessary approvals, including any necessary
governmental or regulatory approvals and the approval of the Hollywood
stockholders, if applicable; (ii) changes to Movie Gallery's strategy and
business plan, including its plans regarding use of capital; (iii) consumer
demand for Movie Gallery's planned product and service offerings; (iv) the
variability in consumer appeal of the movie titles and games software released
for rental and sale; (v) Movie Gallery's ability to respond to changing
consumer preferences and to effectively adjust its product mix, service
offerings and marketing and merchandising initiatives; (vi) Movie Gallery's
ability to timely implement and maintain the necessary information technology
systems and infrastructure to support shifts in consumer preferences and any
corresponding changes to Movie Gallery's operating model, including changes
related to the proposed transaction; (vii) the extent and timing of Movie
Gallery's continued investment of incremental operating expenses and capital
expenditures to continue to develop and implement its initiatives; (viii)
vendor determinations relating to pricing and distribution of their product and
Movie Gallery's ability to reach agreements with service, product and content
providers on acceptable commercial terms; and (ix) 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 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
proxy statement, as well as other filings containing information about the
parties, without charge, at the SEC's Internet site (http://www.sec.gov/).
Copies of the 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 Entertainment and other persons
may be deemed to be participants in the solicitation of proxies in respect of
the proposed transaction. Information regarding Hollywood Entertainment's
directors and executive officers will be available in the 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 proxy statement and other relevant
materials to be filed with the SEC if and when they become available.
Contact:
Thomas D. Johnson, Jr.
SVP - Corporate Finance and
Business Development
(334) 702-2400
DATASOURCE: Movie Gallery, Inc.
CONTACT: Thomas D. Johnson, Jr., SVP, Corporate Finance and Business
Development, Movie Gallery, Inc., +1-334-702-2400
Web site: http://www.moviegallery.com/