Blockbuster Acquisition
On April 26, 2011, we completed the Blockbuster Acquisition. We acquired Blockbuster operations in the United States and in certain foreign countries. Our winning bid in the bankruptcy court auction was valued at $321 million. We paid $238 million, including $226 million in cash and $12 million in certain assumed liabilities. Of the $226 million paid in cash, $20 million was placed in escrow. Subsequent to this payment, we received a $4 million refund from escrow, resulting in a net purchase price of $234 million. Blockbuster primarily offers movies and video games for sale and rental through multiple distribution channels such as retail stores, by-mail, digital devices, the blockbuster.com website and the BLOCKBUSTER On Demand service. The Blockbuster Acquisition complements our core business of delivering high-quality video entertainment to consumers.
From the acquisition date of April 26, 2011 through December 31, 2011, Blockbuster operations contributed $975 million in revenue and $4 million in net income to our consolidated results of operations. As of December 31, 2011, Blockbuster operated over 1,500 retail stores in the United States. We expect to close over 500 domestic stores during the first half of 2012 as a result of weak store-level financial performance. Over 900 of our retail store leases, including the leases for the majority of the stores we expect to close, include favorable early termination rights for us. We continue to evaluate the impact of certain factors, including, among other things, competitive pressures, the scale of our Blockbuster retail operations and other issues impacting the store-level financial performance of our Blockbuster retail stores. These factors, or other reasons, could lead us to close additional Blockbuster retail stores.
This transaction was accounted for as a business combination using purchase price accounting. The allocation of the purchase consideration is in the table below.
| | | Purchase | | |
| | | Price | | |
| | | Allocation | | |
| | | (In thousands) | | |
| Cash | | $ | 107,061 | |
| Current assets | | 153,258 | | |
| Property and equipment | | 28,663 | | |
| Acquisition intangibles | | 17,826 | | |
| Other noncurrent assets | | 12,856 | | |
| Current liabilities | | (86,080 | ) | |
| Total purchase price | | $ | 233,584 | |