The bidding war for Hollywood Entertainment grew more fierce Wednesday as Blockbuster sweetened its offer, but also refused to rule out a hostile takeover.
Blockbuster announced it is willing to increase its $11.50 per share offer, but said the upped bid is contingent on receiving certain due diligence material from Hollywood. So far, Hollywood has refused to open its books unless Blockbuster first agrees to certain “standstill” provisions.
One of those provisions: Blockbuster would be prohibited from making a direct offer to Hollywood shareholders without the approval of Hollywood’s board.
“We believe that Blockbuster is positioned to provide the most value and best serve the interests of Hollywood’s shareholders,” Blockbuster chair-CEO John Antioco said in a statement.
“Unfortunately, we believe Hollywood’s requirement that Blockbuster’s receipt of basic confirmatory information be tied to standstill restrictions is depriving Hollywood shareholders of the opportunity to potentially receive greater value for their shares,” Antioco said.
Blockbuster — whose shares rose more than 5% Wednesday — said it wouldn’t be in the interest of either company’s shareholders to sign any such agreement at this time.
Hollywood informed Blockbuster that it couldn’t provide such information without the standstill provisions because of the $10.25 per share merger agreement between Leonard Green Partners and Hollywood chair-CEO Mark Wattles.
Blockbuster didn’t say how much it is willing to hike its offer. Analysts have speculated that the bidding for Hollywood could eventually push the price up to $14 to $16 per share.
Wednesday’s thrust and parry are just the latest twists in the increasingly complex bidding war for Hollywood.
Late last week, Wall Street takeover artist Carl Icahn revealed in documents filed with the Securities and Exchange Commission that he has accumulated about 8.4% of the outstanding shares but did not indicate whether he plans to play a role in the bidding war.
Hollywood also is being pursued by No. 3 rental chain Movie Gallery, which has made an undisclosed offer to the special committee of Hollywood’s board.
Wattles and Leonard Green Partners started the bidding with a $14 a share buyout offer in March to take the company private. Company later lowered its bid to $10.25 a share, citing changes in “industry and market conditions.”
Wattles currently owns about 5% of the company.