Engaged Capital investment in Outerwall in 2016

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In 2016, Engaged Capital’s activism led to the acquisition of Outerwall by Apollo Global Management for approximately $1.6 billion, reflecting the successful culmination of efforts to unlock shareholder value through strategic initiatives.

Fund	Engaged Capital
Target	Outerwall
Sector	Consumer
Year	2016

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Engaged Capital invested in Outerwall in 2016 and made public a presentation for it. If you are interested to learn about how hedge funds write presentations, here is one for you to learn from.

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About the deal

In 2016, Engaged Capital, a prominent activist investment firm, made significant moves in its investment strategy by targeting Outerwall, a leading provider of automated retail solutions known for brands such as Redbox and Coinstar. Engaged Capital acquired a stake in Outerwall and commenced a campaign to enhance shareholder value through strategic initiatives. This move was a part of Engaged Capital’s broader strategy of actively engaging with underperforming companies to unlock potential and drive improvements in shareholder returns.

Engaged Capital’s investment in Outerwall was driven by its belief that the company’s stock was undervalued and that there were opportunities to optimize its operations and capital allocation. Outerwall had been facing challenges in adapting to changes in the entertainment industry, particularly with the decline in physical media rentals and the rise of digital streaming services. Engaged Capital aimed to work with Outerwall’s management to explore strategic alternatives, including potential divestitures or operational improvements, to maximize shareholder value and position the company for long-term success in a rapidly evolving market landscape.

Throughout its engagement with Outerwall, Engaged Capital advocated for changes to the company’s business strategy, operational efficiency, and corporate governance practices. Engaged Capital’s involvement ultimately led to Outerwall exploring strategic alternatives, including a potential sale of the company. In 2016, Outerwall announced that it had entered into a definitive agreement to be acquired by Apollo Global Management, a leading global alternative investment manager, in a deal valued at approximately $1.6 billion. This acquisition marked a significant outcome of Engaged Capital’s activism in Outerwall and underscored the effectiveness of its investment approach in driving value for shareholders.

About Engaged Capital

Engaged Capital is an activist hedge fund firm based in Newport Beach, California, founded by Glenn Welling in 2012. Specializing in shareholder activism, Engaged Capital takes significant positions in undervalued companies and seeks to improve their performance and unlock shareholder value through various means, including operational enhancements, strategic divestitures, and changes in corporate governance. The firm is known for its constructive approach to activism, often engaging directly with company management and boards of directors to implement positive changes. Engaged Capital has been involved in a number of successful activist campaigns across different industries, leveraging its expertise to drive operational efficiencies and enhance long-term shareholder returns. With a focus on value creation and sustainable growth, Engaged Capital continues to be a significant player in the activist investing landscape.

About Outerwall

Outerwall, formerly Coinstar, is a leading provider of automated retail solutions, best known for its Redbox DVD rental kiosks and Coinstar coin-counting machines. Headquartered in Bellevue, Washington, Outerwall’s Redbox kiosks offer DVD, Blu-ray, and video game rentals at retail locations across the United States, providing convenient entertainment options for consumers. Coinstar machines, also widely available in retail stores, enable individuals to exchange loose change for cash or store credit, offering a simple solution for converting spare change into usable funds. With a commitment to innovation and customer convenience, Outerwall continues to play a prominent role in the automated retail industry, providing accessible and efficient services for consumers and retailers alike.