Hollywood chief quits as takeover bid looms

PORTLAND — The head of Hollywood Entertainment Corp. abruptly resigned a day after Blockbuster Inc. announced a hostile bid of nearly $1 billion for its smaller movie rental rival, which has already agreed to be acquired for less by a third rental industry player, Movie Gallery Inc.

Hollywood Entertainment, which trails only Blockbuster in the U.S. movie rental business, said Thursday that founder Mark Wattles has resigned as its chief executive and chairman. The company didn’t cite a reason for his departure in a brief news release.

F. Bruce Giesbrecht, Hollywood’s president and chief operating officer, was named chief executive, but the company didn’t name a replacement as chairman.

Hollywood Entertainment referred calls to a New York merger consulting firm, MacKenzie Partners, which did not have any immediate comment.

The personnel moves come a day after Dallas-based Blockbuster said Wednesday it would offer $14.50 per share in cash and stock for Hollywood, or about $985 million based on Hollywood’s outstanding shares and options.

Hollywood agreed last month to a takeover by Movie Gallery, the nation’s third-largest movie-rental company, which offered to pay $13.25 cash per share, or about $900 million. Both suitors would assume $350 million in Hollywood debt.

A spokeswoman for Movie Gallery, based in Dothan, Ala., said company executives were meeting Thursday morning and could not immediately comment.

Hollywood shares rose 20 cents to $14.45 in afternoon trading on the Nasdaq Stock Market, while Blockbuster shares rose 25 cents to $9.65 on the New York Stock Exchange. Movie Gallery shares fell 55 cents at $20.70 on the Nasdaq.

In Thursday’s statement, Hollywood said a special committee of its board was considering the offer from Blockbuster and would advise its shareholders of its recommendation by Feb. 17. The company urged shareholders to make no decision until then.