Founder of Hollywood Video May Sell Entire Stake in Chain

The founder and former head of Hollywood Entertainment Corp. may sell all of his remaining shares in the video rental chain before its sale to smaller rival Movie Gallery Inc., according to a filing with U.S. regulators Wednesday.

Mark Wattles, who last week offered to buy as many as half of the chain’s Hollywood Video stores to help win U.S. approval of a hostile takeover by market leader Blockbuster Inc., has already reduced his stake to 6.2% from 9.6%, according to the filing with the Securities and Exchange Commission.

Wattles sold 2.15 million shares on the open market at $14.08 to $14.15 each from March 22 to March 24, the filing said.

Blockbuster dropped its nearly $1-billion bid for Hollywood Entertainment last week, citing difficulties in getting regulatory approval.

Hollywood, the second-largest video rental company, has accepted an $850-million takeover offer from Movie Gallery, the third-largest. The deal has been cleared by regulators but is still subject to shareholders’ approval April 22.

The filing said Wattles, who still had nearly 4 million shares, intended to sell as many as 1 million shares and possibly his entire stake before the Movie Gallery deal closed.