DVD rental kiosk operator Redbox has a new CEO — Galen Smith, previously CFO of parent company Outerwall — and Outerwall chief executive officer Erik Prusch is out with the completion of the company’s $1.6 billion deal to go private.
Outerwall on Tuesday announced the closing of its deal to be acquired by Apollo Global Management for $52 per share in cash, a deal valued at $1.6 billion (including $722 million in net debt as of June 30).
Apollo and Outerwall said the company’s three segments will be managed and operated as distinct businesses, with Smith heading up Redbox, James Gaherity running Coinstar and David Maquera named CEO of the ecoATM businesses.
Redbox has experienced steadily shrinking revenue and profits, as consumers shift toward streaming-video services over DVDs. This summer, Redbox began testing a streaming-video service called Redbox Digital, offering titles to rent or own to a small group of customers, as a “complement” to its core kiosk business.
Smith (pictured above) joined Outerwall in 2009 and was named CFO in 2013. He had previously negotiated studio deals with Sony Pictures Home Entertainment, Universal Studios Home Entertainment and Warner Bros. Home Entertainment. Prior to joining the company, Smith was an investment banker in Morgan Stanley’s Consumer and Retail Investment Banking Group.
“We believe there are many attractive opportunities for us to build on Redbox’s unrivaled brand while enhancing our already strong relationships with Redbox’s studio and retail partners,” Smith said in a statement.
Redbox revenue for the second quarter of 2016 was $389.1 million, down 11.4% year over year, while operating income fell 17%, to $82.1 million. The company said underperforming kiosks it removed or relocated in the prior year accounted for $7.1 million of the revenue decline. Redbox generated 123.6 million rentals in Q2, down 22% from 146 million rentals in the year-earlier period.
As a result of the Apollo transaction, Outerwall became a privately held company effective Tuesday and the company’s stock ceased trading on the Nasdaq.