Blockbuster Inc., the largest U.S. video-store chain, said Wednesday that it was willing to increase its unsolicited $700-million bid for Hollywood Entertainment Corp. if the company provides the same financial information it has given Los Angeles-based buyout firm Leonard Green & Partners.
Blockbuster said in a statement that it was ready to raise the offer of $11.50 a share, which is above the $10.25 a share bid proposed by Leonard Green and Hollywood Entertainment Chief Executive Mark Wattles.
Blockbuster and Leonard Green, along with Movie Gallery Inc., are vying for a chain whose sales have fallen in the last three quarters amid competition from retailers like Wal-Mart Stores Inc. and Web-based rental services such as Netflix Inc.
Shares of Blockbuster have risen 21% since its Nov. 11 offer for Hollywood Entertainment. Movie Gallery, the third-largest video rental chain, followed with a Nov. 19 bid without disclosing the price. Last week, financier Carl Icahn said he bought an 8.4% stake in Hollywood Entertainment.
Hollywood Entertainment's merger agreement with Leonard Green & Partners prohibits disclosure of confidential information unless Blockbuster agrees to "standstill provisions" that prevent it from making a tender offer for the company directly to shareholders.
"We're requesting routine and typical due diligence material from the company," Blockbuster spokesman Randy Hargrove said Wednesday. "It's the same information that has been provided to Leonard Green & Partners and other bidders."
The restriction is "depriving Hollywood shareholders of the opportunity to potentially receive greater value for their shares," Blockbuster Chief Executive John Antioco said.
Shares of Dallas-based Blockbuster rose 45 cents to $8.93 on the New York Stock Exchange. Shares of Wilsonville, Ore.-based Hollywood Entertainment gained 24 cents to $12.93 on Nasdaq. Dothan, Ala.-based Movie Gallery shares rose 35 cents to $17.78, also on Nasdaq.