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Amazon’s CEO Jeff Bezos could be interested in the company. (EPA)
Redbox parent Coinstar is ramping up the money machine.
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, The Post has learned.
Sources said the Bellevue, Wash.-based company has been in discussions with an undisclosed private-equity firm for several months and that the talks are heating up.
A Coinstar spokeswoman declined to comment on “rumor and speculation.”
Coinstar started out counting pennies — literally, customers used its coin-counting machines — but its biggest business by far is the bright red machines offering cheap movie rentals that have sprung up outside grocery stores and other locations.
Coinstar generates roughly 70 percent of its earnings from Redbox’s 35,000 DVD kiosks; the rest comes from change machines that keep a small cut. Redbox controls 43 percent of the kiosk market.
Private-equity firms like businesses that require little capital investment and have steady streams of profit — Coinstar fits the profile.
Redbox is seen as a growing rival to Netflix and is preparing for a head-to-head battle through a joint venture with Verizon. Redbox Instant by Verizon, which is scheduled to launch later this year, will combine DVD rentals and a Web streaming movie service.
With customers cutting back on DVD rentals from Netflix and Blockbuster stores disappearing, investors expect Redbox to be a big beneficiary.
Still, Coinstar disappointed Wall Street last month when Redbox failed to report faster growth. The shares fell 14 percent — the biggest decline in 18 months — after the company’s second-quarter sales trailed analyst estimates.
The shares rose 76 cents yesterday to close at $48.22.
“The stock market isn’t giving them adequate value. It may be more valuable to someone in private equity,” John Kraft, an analyst with D.A. Davidson, told The Post. “I wouldn’t be surprised if they’re getting offers.”
With a market cap of $1.5 billion, Coinstar is trading at less than four times its annual earnings before interest, taxes, depreciation and amortization, or Ebitda.
Earlier this week, Coinstar said Redbox founder and COO Gregg Kaplan would exit in March. It named Anne Saunders to oversee the unit.
Meanwhile, Coinstar has been in a growth mode in a bid to boost its stock price. It banded with Starbucks to expand its coffee vending operations under the Seattle’s Best brand and is getting into photo self-service.
In February, Coinstar acquired Blockbuster-branded DVD kiosks from NCR for $100 million as part of an agreement that will have Coinstar and NCR team on other self-serve concepts.
If Coinstar doesn’t end up in private-equity hands, some industry watchers suggested Amazon would be a perfect fit for Redbox.
Amazon is attempting to rival Netflix with its own streaming video service, and a tie-up with Redbox and Verizon could be useful.