Outerwall, the company that owns the DVD rental kiosk company Redbox, has agreed to sell its holdings in the struggling DVD rental company (including debt) to Apollo Global Management for $1.6 billion, according to various media reports on Monday (July 25).
Apollo Global Management, a private equity firm, will pay $52 for each of Outerwall’s shares, which amounts to a 6.6 percent premium over the stock’s closing price on Friday. It is also, according to Deadline, a 51 percent increase in the stock’s price since Outerwall first announced in March that it was looking at a possible sale of its Redbox holdings.
Outerwall’s stock price has dropped by almost 43 percent in the past year, as DVD rentals continue to decline against the online video streaming market, but the company did see a more than 11 percent jump in its stock price on Monday as news of the sale appears to have encouraged investors.
The deal is expected to close in September, according to The Wall Street Journal.
Outerwall also owns the coin-counting kiosk business Coinstar, as well as ecoATM, another kiosk service that sells used smartphones, tablets and MP3 players, according to WSJ.
The sale agreement states that Outerwall will sell more than half its shares to Apollo Global Management. Outerwall has confirmed that it plans to release its second quarter financials on Thursday.
Apollo Global Management’s plans for the Redbox DVD rental business remain to be seen, but it should be interesting to see how it positions the brand in the future to compete against Netflix, which has had its own growth issues to deal with recently.