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Outerwall Inc. to Acquire ecoATM For $350 Million In Cash

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Outerwall Inc. (Nasdaq: OUTR), formerly Coinstar, Inc., a leader in automated retail, today announced that the company has entered into a definitive agreement to acquire ecoATM for $350 million in cash, which includes payoff of certain indebtedness and certain transaction costs, subject to adjustment for working capital as of closing. In addition, because Outerwall currently holds a 23% ownership stake in ecoATM, consideration for this stake will be deducted from actual cash paid. Upon closing the transaction, Outerwall will own 100% of ecoATM.

ecoATM is the first company to create an automated self-serve kiosk system to purchase used mobile phones, tablets and MP3 players for cash. The kiosks use patented, advanced machine vision, electronic diagnostics and artificial intelligence to evaluate electronics. ecoATM's eCycling stations provide a convenient trade-in solution that connects consumers real-time to broad worldwide secondary markets for the best possible pricing.

ecoATM capitalizes on the growing U.S. mobile device market where 175 million new devices are sold annually. Today, only 20% of used mobile phones are collected, with more than 50% being discarded or stored, representing a significant market opportunity. In addition, the demand for refurbished mobile phones continues to accelerate, due largely to growth in emerging markets.

"With ecoATM, Outerwall will advance its evolution into multiple automated retail businesses and increase our exposure to the growing demand for refurbished products and mobile devices across the globe," said J. Scott Di Valerio, chief executive officer of Outerwall. "As evidenced by our growing investment in ecoATM over the last four years, we are confident that ecoATM's innovative, environmentally minded business model will continue to resonate with today's technology savvy consumers."

"We expect ecoATM to be accretive to Outerwall's EPS in 2014 and to yield a positive return on invested capital in the coming years," said Galen C. Smith, chief financial officer of Outerwall. "In addition, we remain committed to our previously announced target of at least $100 million in annual share repurchase, and will continue to return value to our shareholders in a holistic way."

"Outerwall is a great home for ecoATM, and we are excited to build upon our successful relationship to take the business to the next level," said Tom Tullie, chief executive officer of ecoATM. "We look forward to benefitting from Outerwall's resources and expertise to accelerate ecoATM's rollout and bring our innovative solutions to consumers nationwide once the transaction closes."

ecoATM will remain headquartered in San Diego, California.

The transaction is expected to close in the third quarter of 2013, subject to the receipt of regulatory approvals and other customary closing conditions.

Morgan Stanley & Co. LLC is serving as Outerwall's financial advisor, and Perkins Coie LLP is serving as Outerwall's legal counsel. Capstone Partners LLC is serving as ecoATM's financial advisor, and DLA Piper is serving as ecoATM's legal counsel.

Posted-In: News M&A Press Releases


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