Tags: coinstar | redbox | shares | buyout

Coinstar Shares Jump 7.6% on Sale Speculation

Thursday, 16 Aug 2012 05:08 PM

Shares of Coinstar Inc., operator of the Redbox movie-rental kiosks, rose the most since February on a report, played down by the company’s chief executive officer, that it is holding talks about a potential sale.

Coinstar, based in Bellevue, Washington, advanced 7.6 percent to $51.88 at the close in New York, more than doubling the year-to-date gain to 14 percent.

“We have no idea where it came from,” Chief Executive Officer Paul Davis said of the story, in remarks to analysts at a Canaccord Genuity Global Growth conference in Boston. “We’re head-down focused on running the business and we’re happy with the progress we’re making but that’s about all we’ll comment.”

The Post reported that Coinstar has been in discussions with an undisclosed private-equity firm for months, citing sources it didn’t identify, and that talks are heating up. If the negotiations don’t bear fruit, Amazon.com Inc. would make a good fit, the newspaper said, citing unnamed industry watchers.

Drew Herdener, a spokesman for Seattle-based Amazon, didn’t immediately respond to a request for comment.

Coinstar may be attractive to private-equity investors because its dominance of the DVD market, said Eric Wold, an analyst with B. Riley & Co. in San Francisco. He expects cash flow from continuing operations to increase to $235 million in 2013 from an estimated $164 million this year.

The company plans to start a movie streaming service with Verizon Communications Inc. by the end of this year and also is introducing a coffee kiosk business, Wold said.

“I would not be surprised if private equity was taking a look at the company,” Wold said in an e-mail.

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