Redbox to Become Publicly Traded Company Through Business Combination with Seaport Global Acquisition Corp. (SGAM)

May 17, 2021 8:01 AM EDT

News and research before you hear about it on CNBC and others. Claim your 1-week free trial to StreetInsider Premium here.

Redbox, America's destination for affordable new-release movies and entertainment, announced today that it has entered into a definitive agreement to combine with Seaport Global Acquisition Corp. (Nasdaq: "SGAM", "SGAMU," and "SGAMW") ("Seaport Global Acquisition"), a publicly traded special purpose acquisition company. The transaction will result in Redbox becoming a publicly traded company with an enterprise value of $693 million. Upon closing, Redbox's common stock is expected to trade on Nasdaq under the ticker symbol RDBX.

As part of the transaction, all existing shareholders will roll 100% of their equity in Redbox, including funds managed by affiliates of Apollo Global Management, Inc. (together with its consolidated subsidiaries, "Apollo") (NYSE: APO), which acquired Redbox through the acquisition of Outerwall in September 2016. Upon close of the combination, these existing shareholders will hold approximately 59% of the outstanding common stock.

An Established Leader Poised to Capitalize on Favorable Business Trends

Redbox, a leader in quality home entertainment for nearly two decades, has been undergoing a transformation to offer customers and partners a multi-product experience across physical and digital channels. Capital raised from the transaction will be used to pay down debt as well as invest in innovation and accelerate this transformation, which spans multiple entertainment windows and business models, including film distribution, transactional video on demand (TVOD), premium video on demand (PVOD), ad-supported linear and on demand (AVOD). Redbox is also building technology to offer subscription on demand (SVOD) services as a third-party retailer.

Today Redbox serves a differentiated and value-oriented customer base, with more than 39 million loyalty members. Through this transaction, Redbox will be well positioned to build on its legacy DVD rental business, accelerate its digital transformation and capture a significant and growing market opportunity.

Redbox has a strong foundation for long-term growth and success, and with support from Seaport Global Acquisition, will be better equipped to take advantage of its competitive value drivers, which include:

Strategic Rationale Highlights

  • Strong Legacy DVD Rental Business Provides Significant Growth Opportunity. Redbox serves its customers through 40,000 kiosks across more than 150 retail partners with the lowest priced rentals for new theatrical releases. Approximately 70% of these customers identify as late adopters of new technology, providing Redbox with a unique opportunity to convert customers to its digital platforms over time.
  • Uniquely Positioned to Meet Growing Market Demand. Today's audiences are fueling an unprecedented demand for premium quality on-demand content that is both through subscription and free with advertising. In fact, the AVOD and SVOD markets are expected to grow to a combined $44 billion by 2022. With Free on Demand and Free Live TV, Redbox is building an affordable multi-product ecosystem in a large and fast-growing total addressable market. As the shift to digital intensifies, Redbox's existing AVOD and future SVOD businesses are positioned to capture significant upside potential.
  • Expansive Marketing Reach and Scaled Loyalty Program. The Company reaches more than 46 million consumers via email, more than 43 million mobile app downloads, more than 7 million followers on social media and 6 million SMS subscribers. Through the Redbox Perks loyalty program, the Company engages and incentivizes 39 million members, resulting in higher average revenue per user and reduced churn.
  • Redbox Entertainment Creates Exclusive Content and Drives Incremental Margin Growth. The Company offers exclusive and original content through Redbox Entertainment, a new content acquisition and production division, which is expected to be a key driver of future growth. To date, Redbox has released 16 titles through Redbox Entertainment and has 26 more titles committed for future release. The Company is targeting to ramp to more than 36 new releases per year to grow its exclusive content library.
  • Attractive Financial Profile Represents Solid Foundation for Future Growth and Value Creation. The Company generated $114 million of Adjusted EBITDA in 2020, despite limited new theatrical content and lockdowns stemming from the COVID-19 pandemic. Redbox converts on average over 80% of its Adjusted EBITDA directly into free cash flow and expects strong growth of Adjusted EBITDA and free cash flow through 2023, driven by an increase of theatrical content as releases return to historical levels as well as digital revenue growth.
  • Proven Leadership Team: Following the completion of the transaction, Galen Smith, who has served as Redbox's CEO since 2016, will continue to lead the Company along with the existing management team.

Management Comments

Galen Smith, CEO of Redbox, said:

"Redbox has built one of the most trusted brands in entertainment by consistently delivering on three core tenets: value, convenience and simplicity. Today's announcement brings us one step closer to building an entertainment ecosystem and underscores our steadfast commitment to enhancing our customer value proposition. We are pleased that Seaport Global Acquisition shares our confidence in the opportunities ahead and are grateful for their team's expertise and support. In Redbox's next chapter as a public company, we will be focused on delivering a differentiated, affordable entertainment experience for our millions of loyal customers, and seeking profitable growth for shareholders."

Stephen Smith, Chairman and CEO of Seaport Global Acquisition, said:

"We've long admired Redbox's team for the incredible reputation they've established in the industry, as well as the innovative, scalable business model they've built. Over the past year in particular, the resilience Redbox has demonstrated through the challenges associated with the COVID-19 pandemic reaffirms our confidence in the value and growth potential of the business. We are thrilled to partner with Redbox's team as they work to transform in-home entertainment and deliver long-term growth."

Transaction Overview

The transaction has been unanimously approved by the board of directors of Seaport Global Acquisition and Redbox and is expected to close in the third quarter of 2021, subject to the satisfaction of customary closing conditions.

The transaction, which values Redbox at an enterprise value of $693 million, will be funded by a combination of $145 million of cash held in the trust account of Seaport Global Acquisition, and a fully committed PIPE of $50 million led by Ophir Asset Management. Strategic investors include global content leader Lionsgate (LGF.A, LGF.B), Legendary Entertainment, Screenvision and Basil Iwanyk, producer of the John Wick series and founder of Thunder Road Films. Upon completion of the transaction, Redbox expects to have approximately $209 million in cash that will be used to pay down existing debt and fund digital expansion, content acquisition and marketing initiatives. All references to cash on the balance sheet, available cash from the trust account and retained transaction proceeds are subject to any redemptions by the public stockholders of Seaport Global Acquisition and payment of transaction expenses.

Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Seaport Global Acquisition today with the Securities and Exchange Commission ("SEC") and available at


B. Riley Securities is acting as capital markets advisor to Seaport Global Acquisition and lead placement agent on the PIPE. BTIG, LLC is acting as lead financial advisor and capital markets advisor to Redbox. Moelis & Company LLC is also serving as a financial advisor to Redbox. Apollo Global Securities and BTIG, LLC also served as placement agents on the PIPE.

Paul Hastings LLP is acting as legal advisor to Seaport Global Acquisition. Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor to Redbox. Kirkland & Ellis LLP acted as legal advisor to the placement agents.

Conference Call Information

Redbox and Seaport Global Acquisition will host a joint investor conference call to discuss the transaction and review the investor presentation today, Monday, May 17, 2021, at 7:00 a.m. CT. The conference call can be accessed by dialing +1 877-876-9176 within the U.S. or +1 785-424-1670.

A webcast of the conference call, associated presentation materials, and the conference call replay will be accessible on Redbox's investor relations website at and on Seaport Global Acquisition's news page at

Serious News for Serious Traders! Try Premium Free!

You May Also Be Interested In

Related Categories

Corporate News, Hot Corp. News, Hot M&A, Mergers and Acquisitions, SPAC, Trading Halts

Related Entities

B. Riley, Earnings, Definitive Agreement, IPO, BTIG, SPAC