NEW YORK — Federal antitrust watchdogs won’t oppose Movie Gallery’s bid to acquire larger competitor Hollywood Entertainment, even as the Federal Trade Commission continues to seek documents and depositions regarding video giant Blockbuster’s rival offer — one of the juiciest hostile takeover attempts in recent showbiz history.
Movie Gallery, which agreed in January to buy Hollywood for $13.25 per share in cash, said Monday the waiting period under the Hart-Scott-Rodino antitrust act has expired, leaving it free to proceed with the deal.
Pact still needs approval from shareholders of both companies.
“Clearing the pre-merger review process confirms what we have said all along — Movie Gallery stores do not have any substantial overlap with Hollywood’s stores and therefore pose no risk to competition,” said Page Todd, Movie Gallery’s exec VP and general counsel.
“In contrast, we believe that Blockbuster’s proposal poses significant regulatory risk, as more than 80% of Hollywood’s stores are in the same local market as a Blockbuster store,” he added.
Blockbuster was asked to provide the FTC with more information, which means the company may have to wait 30 more days before it can move forward with its offer, Movie Gallery said.
Blockbuster’s offer is higher — $14.50 per share, made up of $11.50 in cash and $3 worth of Blockbuster stock.
But stockholders pondering Blockbuster’s richer offer must also consider whether the lower-priced deal has a better chance of closing.
Blockbuster argues that such mass-market retailers as Wal-Mart, video-on-demand and competitors like Netflix have transformed the video market.
Blockbuster announced its hostile takeover several weeks ago after it said it wasn’t able to get a seat at the bargaining table with Hollywood Entertainment’s management.
Hollywood chairman-CEO Mark Wattles resigned right after that.
Company has said a special committee of its board will evaluate Blockbuster’s proposal and come up with a recommendation for its shareholders by Thursday.
Blockbuster shares dipped 1.06% to close at $9.30. Hollywood Entertainment fell 1.47% to $14.06. Movie Gallery was unchanged at $21.42.