LOS ANGELES -- Spelling Entertainment Group Inc. and Republic Pictures Corp. announced Monday they will merge operations in a $100 million deal showing the expansion of Blockbuster Entertainment Corp. in Hollywood.
Spelling agreed to pay $13 in cash for each share of the 7.72 million shares of Republic, which is 35 percent owned by Blockbuster, and said it expects the merger to close in January 1994.
Home-video giant Blockbuster bought nearly half of TV program producer Spelling earlier this year for $165 million.
Options and warrants to acquire Republic shares would be converted into rights to receive 1.65 Spelling shares for each Republic share, the two companies said.
Spelling also announced it had signed an agreement in principle to sell about 13.4 million newly issued Spelling shares to Blockbuster Entertainment Corp. for about $100 million, which will boost its stake to 70.5 percent.
The purchase price for the shares would be payable at Blockbuster's option in cash or shares of Blockbuster common stock, Spelling said.
Spelling said it will use the money from the new shares issued to Blockbuster to finance the merger with Republic.
Upon the closing of the merger, Russell Goldsmith, chairman and chief executive officer of Republic, will become president and chief executive officer of Spelling and join Vice Chairman Aaron Spelling, Chairman H. Wayne Huizenga and current President Steven R. Berrard, as a member of its executive committee.
Blockbuster, of Fort Lauderdale, Fla., has been on a buying spree for the past year. Besides spending $165 million on Spelling and $25 million for its 35 percent of Republic, it acquired record retailers Music Plus and Sound Warehouse for $125 million, and formed a $150 million partnership with Britain's Virgin Group for a chain of 'megastores' in the United States and Europe.
It has also formed joint ventures with International Business Machines Corp. to deliver music, films and games electronically to retailers and is considering starting up a cable TV superstation.
Last month it completed two previously announced deals to buy its two largest franchisors for $273.8 million in stock and cash. The deals added 325 stores in the Southeast, Northeast and California to the approximately 2,000 stores that video-retail king Blockbuster already owned.
