Coinstar rolls up 100% of Redbox

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McDonald's is selling its stake in Redbox to Coinstar, which plans to put the DVD kiosks in a lot more locations.

The deal has Coinstar paying $176 million in cash, stock and other considerations primarily to GetAMovie, an affiliate of McDonald's, for its 44% stake in Redbox. Some money will go to smaller stakeholders, and, when the deal closes about Feb. 26, Coinstar will own 100% of Redbox.

Coinstar is best known for its self-serve coin-counting machines, but Redbox — which rents DVDs for $1 a day via automated kiosks at fast-food restaurants, Wal-Mart and other venues — has become a leading source of revenue for the company.

Therefore, Coinstar said it plans to install as many as 8,000 Redbox kiosks this year, bringing the total to about 20,000. When Coinstar first invested in Redbox three years ago, it anticipated that the company would have 10,000 kiosks by the end of 2009.

Coinstar COO Paul Davis said Friday that he expects DVD revenue to increase 80% this year to as much as $750 million, making Redbox the primary sales driver for Coinstar, which expects $1.3 billion in overall revenue this year.

Coinstar recently posted a $4 million profit on revenue that rose 96% to $261 million. For the same first quarter last year, Coinstar posted a $37 million loss.

Coinstar's market cap is more than $780 million, nearly three times that of Blockbuster. (partialdiff)
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