Outerwall, aka Coinstar, Pays $350 Million for San Diego’s EcoATM
Bellevue, WA-based Coinstar says today that it has agreed to pay $350 million in cash to acquire EcoATM, the San Diego cleantech startup that operates kiosks for recycling electronic mobile devices.
The automated retailer, which already was a major investor in EcoATM, with a 23 percent stake, also has changed its name Outerwall, along with its stock ticker (NASDAQ: OUTR). The buyer operates a network of coin cashing machines as well as kiosks for renting movies and video games.
In a statement today, Outerwall says the $350 million deal includes paying off certain indebtedness and transaction costs, subject to adjustment for working capital as of closing. In addition, Outerwall said it would deduct the value of its ownership stake in EcoATM from the deal. Once closed, though, Outerwall will own 100 percent of EcoATM, which will remain in San Diego.
Mark Bowles, an EcoATM co-founder, described how the startup was founded in a commentary for Xconomy in 2010. The startup began in 2008 with the idea of rewarding consumers to recycle their mobile phones by making it easy for them to get a “trade up” discount coupon, cash, gift card, or to make a charitable donation.
Today, EcoATM’s automated kiosks use advanced machine vision, electronic diagnostics and artificial intelligence to assess electronics. The company says it capitalizes on the growing U.S. mobile device market. While 175 million new devices are sold annually, only about 20 percent of used mobile phones get recycled. More than 50 percent are discarded or stored indefinitely, and the company has sought to broaden its market. In February, EcoATM raised $40 million in debt financing from Boston’s Falcon Investment Advisors to expand beyond its existing network of 300 kiosks in 20 states.
With the global demand for refurbished mobile phones accelerating, Outerwall CEO J. Scott Di Valerio said he anticipates growing demand for the kind of used mobile devices that EcoATM recycles. Outerwall said the deal would be accretive to its earnings in 2014, and would yield “a positive return on invested capital in the coming years.”
The transaction is expected to close by the end of September, subject to the receipt of regulatory approvals and other customary closing conditions.