Blockbuster Putting Itself up for Auction

Monday, February 21st, 2011

The now bankrupt Blockbuster Inc. announced today its plans to set itself up for auction and received an opening bid of $290 million from the four largest creditors. This strategy is intended to draw other potential buyers out from the woodwork as well as establish a floor price for the company according to the LA times.

In the same article, Blockbuster Chief Executive Jim Keyes is quoted confirming the company is seeking strategic and financial investors throughout the coming months. Currently, Carl Icahn is the largest owner of Blockbuster’s corporate debt. The so-called stalking horse bidding strategy mentioned in the LA Times is not affiliated with Carl Icahn, but the billionaire may make a run at purchasing the company.

Last summer, Icahn scrambled to purchase the company’s bonds last summer and fall. These rumors led to speculation over whether Icahn was seeking to purchase the company outright and pair it with Metro-Goldwyn-Mayer and Lions Gate Entertainment, which he was also chasing at the time. Icahn has played his cards close to the vest and has declined to talk to the press regarding his business affairs.

Blockbuster’s announcement that they would declare bankruptcy this past September is another casualty of the technological innovations that rapidly are shifting the market not only in the movie industry, but also in the book industry as seen with Borders declaring bankruptcy recently as well. With the advent of Redbox Automated Retail, as well as Netflix Inc. entering the market, brick and mortar companies like Blockbuster are finding it harder to compete. The company has streamlined many of its services and cut costs by closing 609 of its estimated 3,000 stores beginning on February 28th, 2011.

In the bankruptcy proceedings, Blockbuster requested that it be allowed sufficient time to find a buyer, as it was the option of last resort in order to avoid liquidation.



Article by Andrew Timm

The views expressed are the subjective opinion of the article's author and not of

Tags: bankruptcy , blockbuster , stalking-horse

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