Blockbuster withdraws Hollywood Entertainment offer

March 26, 2005

Video
rental giant Blockbuster withdrew it's approximately 1 billion dollar offer to
merge with Hollywood Entertainment on Friday, citing the likely rejection
of the plan by the Federal Trade Commission. While this is probably good news
for us, in that such a deal could possibly stifle competition in the
marketplace, this still opens the way for another merger between Hollywood and
the nations #3 rental dealer, Movie Gallery.

Blockbuster, the video-rental giant, deserted its bid
Friday to acquire Hollywood Entertainment, the second-largest video-rental
chain, citing the likelihood that the Federal Trade Commission would
reject the deal on antitrust grounds.

Blockbuster's decision not to renew its nearly $1 billion offer, which
expired at midnight Thursday, clears the way for the No. 3 rental company,
Movie Gallery, to complete its own $850 million acquisition of Hollywood
Entertainment. That merger has already received a regulatory nod.

``Our decision not to extend our offers was reached after a careful
review of all the available facts and circumstances,'' Blockbuster Chief
Executive John Antioco said in a statement. Antioco cited ``the unlikely
resolution of our request for regulatory clearance on an acceptable
timetable'' as a chief reason for the
withdrawal.

If Blockbuster and Hollywood Entertainment had managed to combine their
assets, it would have given them control of more than 50 percent of
the home video-rental market. You may check out the rest of the article from the Mercury News
here.

Source: The Mercury News