Blockbuster Gains an Ally in Icahn

Billionaire financier Carl Icahn boosted his stake in Hollywood Entertainment Corporation to 9.54% and said he supports Blockbuster Incorporated’s bid for the second-largest American video-rental chain.Icahn said he has contacted the chief executives of both companies and will try to “facilitate a combination” between Hollywood Entertainment and Blockbuster, according to a Securities and Exchange Commission filing yesterday.Blockbuster is gaining an ally in its bid for Hollywood Entertainment amid offers for the company by Movie Gallery Incorporated and a group led by Los Angeles buyout firm Leonard Green & Partners.Mr. Icahn built his fortune buying stakes in companies involved in takeover battles such as Trans World Airlines and profiting as the shares rose.“Icahn fully intends to sell his shares in Hollywood to Blockbuster,” said the senior vice president for research at Wedbush Morgan Securities in Los Angeles, Michael Pachter. “He believes that the combined Blockbuster-Hollywood is a valuable enterprise.”Mr. Pachter rates Blockbuster shares as “buy” and Hollywood Entertainment as “hold” and doesn’t own shares of either company.Mr. Icahn and his holding companies bought 5.8 million shares of Hollywood Entertainment for $69 million, the filing said. Mr. Icahn said he’s now the largest holder of the company’s outstanding shares. Mr. Icahn did not respond to a voicemail message for comment.A spokesman for Dallas-based Blockbuster, Randy Hargrove, had no immediate comment. An official from Wilsonville, Ore.-based Hollywood Entertainment didn’t respond to a voicemail message left on the company’s press line.A partner at Leonard Green & Partners, John Baumer, didn’t respond to a telephone message for comment.Blockbuster has made an unsolicited $700 million offer for Hollywood Entertainment. Movie Gallery last month bid for the company, without disclosing the terms. Leonard Green & Partners offered $10.25 a share in October.Mr. Icahn last month bid $5.38 billion for Mylan Laboratories Inc., the largest American maker of generic medicines. Mylan on November 22 said the financier wasn’t serious about the offer. Mr. Icahn in a November 19 letter said he was making the bid to block the company’s proposed purchase of King Pharmaceuticals.In 2000, Mr. Icahn made his fourth run to take over Nabisco Group, whose sole asset was an 80.5% stake in Nabisco Holdings, the largest American maker of cookies and crackers.Hollywood Entertainment shares rose 9 cents to $13.07 at 4:13 p.m. New York time in Nasdaq Stock Market trading. Blockbuster shares rose 40 cents to $9.20 on the New York Stock Exchange.

Blockbuster Gains an Ally in Icahn

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