The Federal Trade Commission sought to prevent
from acquiring shares of
, citing problems with the suitor's application for antitrust review.
While the application issues appear procedural, the stakes are potentially high, because Blockbuster has threatened to go forward with a hostile tender offer next week -- with or without the FTC's clearance.
The commission asked a court to issue an injunction before March 11.
A month ago, Dallas-based Blockbuster announced a hostile bid to acquire Hollywood for cash and stock worth $14.50 a share, plus debt assumption. Hollywood's board prefers an offer from
which, although lower than Blockbuster's, already has FTC clearance.
In a complaint filed in federal court in Washington, the FTC asked for an order "enjoining Blockbuster from acquiring, directly or indirectly, any interest in Hollywood until Blockbuster has conducted a thorough search for responsive material and recertified its original notification and report form," among other things.
The motion seeking the injunction said about half of the original data submitted to the FTC by Blockbuster was inaccurate due to a programming error. The glitch was later fixed and complete data submitted, but the FTC believes its 30-day review period started only then -- March 1 -- not, as Blockbuster has argued, at the time of its original submission.
A proposed acquisition of Hollywood by Blockbuster was tossed out six years ago on antitrust grounds, but that was before the advent of new digital delivery technologies and rise of rent-by-mail outfits like
A spokesman for Blockbuster said the company is currently awaiting clarity on the waiting period time before making any further announcement.
Blockbuster shares fell 8 cents to $8.67, Friday, while Hollywood shares rose 2% to $14.06, and Movie Gallery stock rose 2 % to $26.43.