Outerwall, the Bellevue, Wash.-based parent company of Coinstar, Redbox and other automated kiosks, says it “has initiated a process to explore strategic and financial alternatives to maximize shareholder value” — raising the possibility, at least, that the company could be sold.
The company says it has hired Morgan Stanley as its financial advisor and Perkins Coie as its legal advisor as part of the process.
The move comes amid financial hard times for the company as its annual revenue dropped 11.8 percent in 2015, to $527.2 million. The company’s troubles come largely from its underperforming DVD business Redbox, responsible for 80 percent of the company’s net sales.
With the rise of Netflix and other streaming services, the market for DVDs is drying up. The company’s stock is now down 48 percent from last year, trading today at about $34.30 a share — numbers it hasn’t seen since 2010.
In 2014, Outerwall tried to pivot the Redbox business into the world of video streaming, partnering with Verizon, but that venture fizzled out, and left Redbox struggling. So far, the company has shut down its Redbox kiosks in Canada and has closed many kiosks in the U.S. Outerwall also has searched for a new kiosk business to make up for Redbox’s declines, but so far nothing has caught on.
Along with the announcement today, the company said it will double the quarterly dividend to its shareholders to 60 cents a share.
“The increase of our quarterly dividend to this sustainable level, and the decision to explore strategic and financial alternatives both clearly demonstrate that the Outerwall Board of Directors and management team are committed to acting in the best interests of the Company and all shareholders,” said CEO Erik Prusch, who is new to Outerwall as of last summer and who replaced Redbox president Mark Horak in December.
“The Board and management team will evaluate all options thoughtfully and carefully with the support of our advisors,” the CEO added. “Throughout the review process, Outerwall will remain focused on executing on our operational plans, managing our businesses for profitability and cash flow, and continuing to align costs with revenue to create operational efficiencies, while returning significant capital to our investors.”
The details of any financial and strategic alternatives have yet to be worked out, however, and Outerwall says it will wait until its board decides on a plan before making any moves.
