The New York Post reported on Aug. 16 that undisclosed sources have reported talks between Coinstar (Bellevue, WA) and a private equity firm. A Coinstar spokeswoman told the newspaper that the company will not comment on "rumors and speculation."
According to the Post, "Coinstar, best known for its self-service movie rental kiosks, is holding talks about a potential sale while it also navigates a vending-machine expansion ranging from coffee to photo printing." | SEE STORY
This spring, Coinstar announced a test of a whole-bean single-cup vender, called Rubi, in conjunction with the Seattle's Best unit of Starbucks. The company's Redbox Automated Retail unit also formed a partnership with Verizon Communications to launch a DVD-and-streaming video service, and began negotiations to purchase certain assets of NCR Corp.'s DVD kiosk business (see VT, March). That deal closed in late June.
The Post reported that Coinstar generates about 70% of its earnings from the 35,000 DVD kiosks operated by its Redbox division; the remainder comes from Coinstar self-service coin counting machines that return a small percentage of the transaction value.
The newspaper observed that "Private-equity firms like businesses that require little capital investment and have steady streams of profit." Coinstar fits the profile, the newspaper stated.
Reuters news service subsequently reported that Coinstar shares rose by as much as 10% after the Post story was published. Securities analysts it consulted suggested that Coinstar "has too many growth drivers ahead to consider a sale at this stage," and speculated that if it were to sell anything to a private equity firm, the coin-counting business would be the most likely candidate.