Apollo Global to buy DVD-rental kiosk chain Redbox owner Outerwall for $1.6 bn
26 July 2016
US private equity firm Apollo Global Management yesterday struck a deal to buy Outerwall, owner of struggling DVD-rental kiosk chain Redbox, for $1.6 billion including debt.
Apollo Global has offered to pay $52 per share in cash for Nasdaq-listed Outerwall, a premium of 51 per cent over the closing share price 14 March, before the company's board started exploring strategic alternatives.
Financing is being provided by Bank of America Merrill Lynch, Jefferies Finance LLC, Barclays and Credit Suisse.
The deal is expected to close in the third quarter of 2016 and Outerwall will become a privately held company post closing.
Outerwall, formerly known as Coinstar, is a Washington-based company with a network of movie and video game rental kiosks as well as coin-cashing machines.
The company originally started with focusing on loose change into paper currency, donations, and gift cards via coin counter kiosks.
Outerwall operates Coinstar machines which deduct a fee for conversion of coins to banknotes, and Coinstar Exchange for gift cards.
It also owns the Redbox DVD rental service which offers Blu-ray, DVD and video game rentals.
Outerwall has more than 40,000 kiosks located in neighborhood grocery stores, drug stores, mass merchants, malls, and other retail locations in the US, Canada, Puerto Rico, the UK, and Ireland.
Outerwall also produces machines that provide prepaid credit cards, cellular phone cards, tickets to concerts, and e-payment kiosks.
"Outerwall's Board of Directors has undertaken a comprehensive review of a wide range of strategic and financial alternatives to maximize value for all Outerwall shareholders. We are pleased to reach this agreement, which follows a robust process and provides an immediate and substantial cash premium to our shareholders," said Erik Prusch, Outerwall's CEO.
"Outerwall is a dynamic customer-focused business that delivers superior kiosk experiences that delight consumers and generate value for its retailer partners. We look forward to working with Outerwall's talented and dedicated team to continue the business's strong heritage of growth and innovation," said David Sambur, partner at Apollo.