DVD rental kiosk company Redbox takes a different spin today as a group of funds from Apollo Global Management closed a $895 million deal (not including debt) to buy the DVD kiosk company’s parent, Outerwall.
Apollo divided operations into three separate businesses with Galen Smith, who had been Outerwall’s CFO, becoming Redbox’s CEO. Outerwall CEO Erik Prusch left the company.
Smith vows to “continue to provide new movie and video game releases to millions of loyal consumers at a great value.” He sees “many attractive opportunities for us to build on Redbox’s unrivaled brand while enhancing our already strong relationships with Redbox’s studio and retail partners.”
Apollo’s payment of $52 a share for Outerwall, taking it private, was 38% below the company’s trading price in mid-July 2015. The decline was partly due to a deceleration in DVD rentals as consumers flocked to streaming services.
Redbox’s Q2 revenues fell 11.4% from the same period last year to $389.1 million, which the company attributed to “secular decline in the physical market on movie rentals.” The operation had 123.6 million rentals, down 15.3%.
In April, Outerwall reached an agreement giving board seats to dissident shareholder Engaged Capital, which owned 14.6% of the company, after it lobbied for it to go private. In a public letter in February it attacked the Redbox owner’s “failed strategies, flawed capital allocation policies, and misaligned governance.”