Video rental company Blockbuster has announced it will be carrying out a special auction to sell off its U.S. and international subsidies after a bidder, Cobalt Video Holdco, offered the company $290 million. Blockbuster plans to use the bid as a “stalking horse” offer, meaning the $290 million is a minimum bid it will accept—but if anyone comes along and offers more money, Blockbuster is interested.
The once-mighty Blockbuster declared bankruptcy back in September 2010, and has been looking for ways to shore up its bottom line and restructure the company has an ongoing enterprise. Part of that strategy appears to involve getting some new owners.
“By initiating a sale process at this time, we intend to accelerate our Chapter 11 proceedings and move the company forward,” said Blockbuster chairman and CEO Jim Keyes, in a statement. “An auction will allow the company to invite competing bids from both strategic and financial investors. This will also allow for the consolidation of ownership of the company to those with a clear and focused vision for Blockbuster’s future.”
Blockbuster will need approval from the bankruptcy court in the southern district of New York before it can carry out the auction; the court will have to be satisfied that the auction represents a prudent move likely to return the largest possible value to creditors. The company hopes to be sold to the highest bidder by late April.
Blockbuster has been struggling for years to maintain a high-cost base of retail stores in the face of competition from the like of Netflix’s DVD-by-mail and online streaming operations. Although Blockbuster has launched streaming services of its own, the company was forced to close 1,000 retail locations back in 2009, although the company has managed to keep its remaining retail operations running during bankruptcy, both in the United States and internationally.