Coinstar to buy remaining stake in Redbox
Bellevue company announces deal along with its fourth-quarter financial results after the close of regular stock-market trading today.
Seattle Times business reporter
Bellevue-based coin-counting machine operator Coinstar said today it has signed a deal with a McDonald's affiliate to take full ownership of automated DVD movie-rental business Redbox.
Coinstar estimates that the cash-and-stock transaction, which is expected to become final on Feb. 26, will cost between $155.5 million and $175.9 million.
Coinstar plans to pay GetAMovie, the McDonald's affiliate, $10 million in cash and 1.5 million shares of common stock for its 44.4 percent stake in Redbox. Also, Coinstar said it has made a similarly structured arrangement with the remaining minority-interest holders to bring its stake — currently at 51 percent — to 100 percent.
The company announced the deal along with its fourth-quarter financial results after the close of regular stock-market trading today.
For the three months ended Dec. 31, Coinstar made a profit of $4.2 million, or 15 cents a share, up from a loss of $37.2 million, or $1.34 a share, a year ago. Sales nearly doubled to $260.98 million from $133.31 million in the fourth quarter of 2007.
Oakbrook Terrace, Ill.-based Redbox operates DVD vending machines in 12,000 U.S. locations, including McDonald's restaurants and Wal-Mart Stores. A typical kiosk holds 700 DVDs with up to 200 titles, updated weekly. Customers can rent a movie for $1 a night and return it to any of the company's kiosks.
Coinstar spokeswoman Marci Maule said Redbox will remain headquartered in the Chicago area.
Coinstar began investing in Redbox in 2005, ultimately pumping $37 million into the business over the next three years.
Last fall, Redbox filed a lawsuit in federal court in Delaware against Universal Studios Home Entertainment over a new distribution proposal that it believes would limit its ability to offer new movie releases. Coinstar officials declined to elaborate on the lawsuit during a conference call with analysts this afternoon.
Shares of Coinstar closed down 62 cents, or 2.67 percent, to close at $22.59. The stock rose more than a dollar in after-hours trading to about $23.70.
Amy Martinez: 206-464-2923 or email@example.com
Copyright © 2009 The Seattle Times Company
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