DALLAS – Blockbuster Inc. (BBI) has offered $700 million for rival Hollywood Entertainment Corp. (HLWY) in a deal that would extend Blockbuster's position as the world's largest movie rental company. Shares of both companies rose.
Blockbuster said in a news release Thursday it has "expressed an interest" in acquiring Hollywood Entertainment for $11.50 per share, a 17 percent premium over Hollywood Entertainment's closing price of $9.80 on Wednesday.
In addition, Dallas-based Blockbuster would assume about $300 million in Wilsonville, Ore.-based Hollywood Entertainment debt in the deal.
Blockbuster shares were up 44 cents, or 6 percent, at $7.82 on the New York Stock Exchange (search), while Hollywood Entertainment shares rose $1.10, or 11 percent, to $10.90 on the Nasdaq Stock Market (search).
Blockbuster said that while it has communicated its interest to Hollywood Entertainment, there hasn't yet been a substantive discussion on the terms.
"We believe this proposed transaction better positions Blockbuster to compete in the rapidly changing home entertainment marketplace, while simultaneously benefiting consumers as well as Blockbuster and Hollywood Entertainment shareholders," said John Antioco, Blockbuster Chairman and CEO.
Hollywood Entertainment owns and operates more than 1,920 Hollywood Video superstores and 600 Game Crazy (search) specialty stores. Blockbuster has about 9,000 stores worldwide.