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Blockbuster Considering New Bid for Rival Chain

January 19, 2005|From Associated Press

Blockbuster Inc., the nation's largest movie-rental chain, confirmed Tuesday that it was still interested in buying Hollywood Entertainment Corp. despite its smaller rival's agreement last week to be purchased by another competitor, Movie Gallery Inc., for about $850 million.

John Antioco, Blockbuster's chairman and chief executive, said his Dallas-based company was evaluating making a new offer, a signal that the bidding could go higher.

Blockbuster also said antitrust regulators had asked for more information about its offer to buy Hollywood Entertainment, which the company expected to provide by the first week of February.

Antioco said he was disappointed that a special panel of Hollywood Entertainment's board accepted a Movie Gallery offer "without giving Blockbuster a fair opportunity to participate in the auction process."

Portland, Ore.-based Hollywood Entertainment has refused to open its books to Blockbuster unless it agrees not to launch a hostile takeover for three years. Blockbuster, which said it needed to see the information to determine a fair price, rejected the condition.

Dothan, Ala.-based Movie Gallery, the nation's No. 3 movie-rental chain, agreed last week to pay $13.25 a share in cash for No. 2 Hollywood Entertainment and assume about $350 million in debt. That trumped Blockbuster's bid of $11.50 a share.

Antioco said it no longer made sense for Blockbuster to begin a previously threatened hostile takeover of Hollywood Entertainment at the $11.50-a-share price, but he said Blockbuster was considering what price it would be willing to offer taking other factors into account, including a termination fee to Movie Gallery that is included in the deal with Hollywood Entertainment.

Hollywood Entertainment shares Tuesday rose 13 cents to $14.35, while Movie Gallery fell 18 cents to $20.47, both on Nasdaq. Shares of Blockbuster rose 17 cents to $9.65 on the New York Stock Exchange.

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