Redbox Owner Outerwall to Add Engaged Capital Slate to Board

Outerwall Inc., the operator of Redbox movie rental kiosks, agreed to nominate three new directors to its board as part of an agreement reached with its second-largest shareholder, activist investor Engaged Capital LLC.

The company said Jeffrey J. Brown had been appointed to its board effective immediately, expanding it to eight directors. In addition, Outerwall agreed to add two new independent directors proposed by Engaged, who are expected to be named by August 1. Outerwall said it's board will be capped at nine directors at that time.

In exchange, Engaged agreed to vote all of its shares in favor of Outerwall's board nominees at its annual shareholders meeting.

Engaged owns 2.4 million shares in Outerwall, representing a 14.6% stake, according to FactSet.

The moves come about two months since Engaged sent a scathing letter to Outerwall's board that criticized chairman Nelson Chan and blasted the company's "penchant for chasing growth," citing what it viewed as poor corporate governance.

Engaged had called on the board to focus more closely on its Redbox movie rental machines and Coinstar coin-counting kiosks, and manage both to drive cash flow. It also called for a large annual dividend; the company in March doubled its quarterly dividend to 60 cents from 30 cents.

Erik E. Prusch, Outerwall's chief executive, said the company is "aligned with shareholders and taking decisive actions on their behalf."

Shares of Outerwall rose 24% in the past three months. The stock was inactive premarket.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

April 12, 2016 09:55 ET (13:55 GMT)

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