Agency says no to vidtailer's proposed merger
WASHINGTON — Blockbuster and the Federal Trade Commission are apparently headed to court after all.
Company officials said Wednesday that the agency will likely move formally to block the vidtailer’s proposed merger with its leading rival, Hollywood Entertainment, next week.
“We’ve been given no formal indication (by the FTC), but we’ve been offering to compromise with them since December to get this thing resolved and they’ve been rebuffing us,” Blockbuster exec VP-general counsel Ed Stead said. “They’re still rebuffing us, so I guess they’re not interested in resolving it.”
Won’t drop hostile bid
Stead said Blockbuster would go ahead with its $14.50-per-share hostile bid for Hollywood despite the agency’s expected rejection of the deal.
“We’re going ahead. It’s up to (the FTC) to file an action to stop us,” Stead said. He added that he expects the agency to file such an action sometime after Monday, when the agency’s current review period for the merger is slated to expire.
Last week, the two sides agreed to extend the review by two weeks to stave off a showdown in court over whether Blockbuster had fully cooperated with the agency’s review.
Under federal law, the FTC has 30 days to review proposed mergers, after which it must either approve them or go to court to block them.
Earlier this month, however, the agency filed a motion in federal district court here charging that Blockbuster had failed to provide all the information regulators requested within the original 30-day period.
According to the agency, Blockbuster did not fully comply with the request for data until early March, which would have pushed the review period into early April.
Blockbuster claimed the 30-day clock started in February.
“We gave them the extension they wanted, and they were supposed to be using that time to tell us what theories they were using to analyze the deal so we could explain our theories,” Stead said. “But yesterday the (FTC) staff told us they had been instructed by the commissioners not to tell us anything.”
Blockbuster had hoped to close on its offer for Hollywood’s shares by March 24, but the likelihood of litigation makes that unlikely.
“We hope that we could get an expedited hearing, and then get a hearing on a preliminary injunction and have that resolved by mid-April,” Stead said. “It would be reasonable to expect that Hollywood shareholders would wait until then to tender their shares.”
Blockbuster officials said last week that they are confident they would prevail in court if the company can’t reach a compromise with the agency.
“We look forward to getting our case before a neutral judge,” Stead said.
Meanwhile, the clock continues to tick on Movie Gallery’s competing bid for Hollywood.
The two reached a definitive agreement on a friendly merger in January but have not yet received approval from the Securities and Exchange Commission to put the deal to a vote by Hollywood’s shareholders.
That agreement remains in effect until May 1, after which it would have to be renewed or renegotiated.