Private Equity Firm Buys $1.6 Billion In Redbox DVDs And Coinstar Change

Image courtesy of thekirbster

Outerwall, the company behind the seemingly ubiquitous Redbox and Coinstar kiosks, hasn’t been doing so well lately. When both DVDs and cash are losing popularity, what should a company with a business model that depends on people using both do? The company’s new owner, Apollo Global Management, will help it to figure that out without the pressure of worrying about the stock price.

The Wall Street Journal notes that about 46% of shares on the market were held by companies who were shorting the company, or betting that its stock price would fall in the future, even with the news that the company has a new streaming service currently in tests. Instead, Apollo is paying 50% over the current price that the company’s stock was trading before the sale.

The company’s revenue is projected to fall 11% this year. What can it sell other than DVDs and coin-changing? The company began 13 years ago by testing both the DVD kiosk concept, and a general convenience store in a kiosk, but the DVD concept was more popular, it being 2003 and all. Maybe the time has come to bring back those mini stores.

Just this morning, Wedbush Securities put out a helpful note rating the stock “neutral,” not calling the company doomed but not recommending that clients invest in it, either. Of course, that note was released around the same time as the acquisition news.

Outerwall to Be Taken Over by Apollo in $1.6 Billion Deal [Bloomberg]
Outerwall Deal Catches Wall Street Off Guard [Wall Street Journal]