Los Angeles-based private equity firm Leonard Green & Partners has agreed to buy all outstanding shares of Hollywood Entertainment in a going-private deal worth approximately $888 million (€730.9 million).
Leonard Green will pay $14 each for 63.4 million shares of the Wilsonville, Oregon-based company, which owns Hollywood Video, the second largest chain of movie-rental stores in the US behind Blockbuster Video.
According to a Bloomberg news report, Hollywood Entertainment said in January it was considering options, including finding a buyer, after a drop in 2003 net income and losses in two of the past five years. Competition from Blockbuster, Netflix mail-order rentals, Wal-Mart Stores and video-on-demand services has been causing the company’s market share to slip, the news report said.
UBS AG provided debt financing for the transaction, which is expected to close in the third quarter of 2004, according to a press statement. Hollywood Entertainment currently operates more than 1,920 Hollywood Video locations and 600 Game Crazy video game stores.
Leonard Green made the investment with its $1.85 billion Fund IV. The firm currently manages more than $3.6 billion in capital, and has invested in notable companies including PetCo Animal Supplies, Rite Aid and Sports Authority.