News

Redbox closes deal to buy NCR's DVD kiosks

June 26, 2012

Coinstar's Redbox has completed the acquisition of NCR's DVD kiosk business, including DVD kiosks, DVD inventory, intellectual property and certain retailer contracts.

Under the terms of the asset purchase agreement, Redbox paid NCR $100 million and assumed certain liabilities of NCR related to the purchased assets, according to a company press release. In connection with the asset purchase, Coinstar and NCR have entered into a strategic supplier arrangement whereby Coinstar, Redbox or an affiliate will purchase products and services from NCR that will yield $25 million in margin for NCR over five years.

"With the closing of the NCR transaction, we have strengthened our ability to bring the value and convenience of Redbox entertainment to new retail partners and their customers," said J. Scott Di Valerio, chief financial officer of Coinstar Inc. "While we expect to incur losses during the initial period, as we swap out the acquired kiosks for new Redbox kiosks, we expect the economics to improve and become accretive sometime in 2013."

Coinstar, for this year, expects that the asset purchase will lead to a decrease in diluted earnings per share from continuing operations between $0.40 and $0.50 per share; and an increase in capital expenditures between $40 million and $45 million.

Coinstar will provide additional information relating to the expected impact of the transaction, including a breakdown of core and non-core components, when it reports second quarter 2012 financial results and updates guidance in July, accoridng to the release.

Read more about DVD kiosks.