Chicken Soup for the Soul Entertainment is using its own stock to acquire Redbox. This will have holders of RDBX stock receiving 0.087 shares of CSSE stock for each share that they own. When the deal closes, CSSE investors will own 76.5% of the combined company with RDBX investors owning the remaining 23.5%.
Chicken Soup for the Soul Entertainment and Redbox are expecting annual-run rate cost synergies above $40 million in 2023. The combined company also expects to leave 2022 with a run-rate exceeding $500 million in revenue, as well as $100 million to $150 million of Adjusted EBITDA.
Redbox and Chicken Soup for the Soul Entertainment are looking for the deal to close in the second half of 2022. Both companies’ board of directors have approved the deal. Also, a majority of RDBX and CSSE shareholders have already agreed to approve the transaction. That just leaves regulatory approval and other customary closing conditions.
RDBX investors clearly aren’t happy with today’s deal. Shares are slipping as some 11 million units change hands. That’s above the movie rental company’s daily average trading volume of 10 million shares.
So what has RDBX shareholders so upset? Redbox has been popular with retail traders lately looking to pump the shares higher. That includes expectations for it to become a top short squeeze. With this deal, those plans come to an end and it doesn’t look like retail traders appreciate that.
RDBX stock is down 33.5% as of Wednesday morning.
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InvestorPlace has all the latest stock news traders need to know about today! That includes this morning’s biggest pre-market stock movers, as well as the most recent news from Nintendo (OTCMKTS:NTDOY) and SoFi (NASDAQ:SOFI). You can catch up on all of this at the following links!
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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