US entertainment chain Blockbuster has reportedly agreed to sell itself to consortium Cobalt Video Holdco, though its future as a business remains very much open to speculation.
The deal is believed to be worth $290m. Blockbuster has asked permission from the New York courts to hold an auction for itself to be concluded by April 20th.
Comprised within the consortium are a number of private equity and hedge fund firms including Monarch Alternative Capital, Owl Creek Asset Management, Stonehill Capital and Varde Partners.
The group claims that it intends to buy all of Blockbuster's US assets as well as its international businesses – which would include its still profitable UK operations. However, the reposed deal does not include a commitment to continue the business.
In the meantime, the chain expects its US operations, which include stores, DVD vending machines and a digital business, will continue to trade throughout the bidding process.
“By initiating a sale process at this time, we intend to accelerate our Chapter 11 proceedings and move the Company forward," chairman and CEO Jim Keyes stated.
"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.
“The purchaser will be able to take full advantage of Blockbuster’s many strengths, which include an internationally recognised brand name, an exceptional library of more than 125,000 titles, millions of loyal customers, and a multi-channel content distribution platform. Because of its ability to deliver physical content (through DVDs) and digital content (through streaming), Blockbuster can offer customers the unique ability to access any movie, any time.”
What former Blockbuster director and significant shareholder Carl Icahn makes of the deal remains unclear. His name has in recent weeks come to the fore over his alleged involvement in a possible sale of Take-Two to Activision.