Redbox Parent to Be Acquired

Apollo Global Management to take Outerwall private via $1.6 billion deal
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Outerwall, the parent company of DVD-rental kiosk operator Redbox and Coinstar money services, has inked a $1.6 billion deal to be acquired by private-equity firm Apollo Global Management.

The deal, which comes about four months after Outerwall retained two firms to help it explore strategic alternatives, calls for Apollo Funds to acquire all outstanding shares of Outerwall’s common stock for $52 per share in cash. The Outerwall board has blessed the deal.

That offer is about 51% above Outerwalls’ closing stock price on March 14. Outerwall shares were up $5.35 (11.4%), to $52.26 each, in late morning trading Monday.

The offer also arrives soon after Redbox confirmed it is testing a digital VOD/electronic sell-through offering called “Redbox Digital” that aims to complement the unit’s core kiosk rental business.

Outerwall CEO Erik E. Prusch said in a statement that “Apollo is an ideal partner to support Outerwall's efforts to continue serving our millions of loyal customers and dedicated retail partners through our unrivaled network of kiosks and automated retail offerings.  We look forward to working closely with Apollo as we continue to strengthen our businesses and execute on our strategic plan."

They expect to close the deal in Q3 2016. Outerwall will then become a private company.

Outerwall’s Redbox unit pulled in approximately 137.7 million rentals in the first quarter of 2016, down from approximately 173.0 million rentals in the first quarter of 2015.

Outerwall will release Q2 earnings after market close on Thursday, July 28, and does not intend to hold a conference call to discuss them. The Outerwall board also declared a quarterly dividend of 60 cents per share of common stock.

Morgan Stanley & Co. served as financial advisor to Outerwall, and Wachtell,Lipton, Rosen & Katz and Perkins Coie LLP are serving as legal counsel. LionTree Advisors, Bank of America Merrill Lynch, Barclays, Credit Suisse and Jefferies LLC are acting as M&A advisors to Apollo, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to Apollo.

Financing is being provided by Bank of America Merrill Lynch, Jefferies Finance LLC, Barclays and Credit Suisse.

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