Redbox owner to be sold to Apollo Global Management for $1.6 billion
Investment firm Apollo Global Management is set to acquire the Washington-based Outerwall, owner of struggling DVD-rental kiosk chain Redbox, for $1.6 billion.
Apollo, which is headquartered in New York, will acquire Outerwall’s outstanding shares of common stock for $52 per share. The all-cash deal, which was announced Monday, includes net debt and is expected to close in the third quarter of 2016. Outerwall will become a privately held company following the sale.
The transaction was unanimously approved by Outerwall’s board of directors. Outerwall also owns Coinstar, a chain of kiosks that convert loose change into paper currency. Outerwall’s growth has been stunted in the wake of Redbox’s ongoing financial difficulties.
The automated kiosks, which offer Blu-ray, DVD and video game rentals, have struggled to compete with the rising popularity of digital streaming services such as Netflix. Redbox is one of the last major retailers that offer physical film and video game rentals.
Outerwall has estimated it would close as many 2,000 Redbox kiosks during 2016. It had 40,480 kiosks as of Dec. 31.
Redbox partnered with Verizon to launch a streaming service in 2013, but it failed to gain significant traction and was shut down the following year. Although the company began quietly testing a new streaming service titled Redbox Digital last week, the service is in its early stages and is not open to the public.
Shares in Outerwall jumped more than 11% to $52.19. The shares were worth nearly $82 a year ago. Apollo shares remained virtually unchanged at $16.49 today.
Though Outerwall’s Coinstar business has continued to enjoy success, Redbox’s revenue suffered noticeably in the first quarter, when revenue plummeted 19% to $421.5 million, compared with the same period a year ago.
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