Viacom-Blockbuster head for splitsville

MUMBAI: Viacom and Blockbuster have jointly announced terms of separation. The divestiture is to be achieved through split-off exchange offer to Viacom stockholders.

The registration statement was filed with the Securities and Exchange Commission, yesterday.

Prior to the commencement of the exchange offer, Blockbuster anticipates paying a pro rata special cash distribution of $5 per share, or a total of approximately $905 million based on the number of shares currently outstanding, to all stockholders, including Viacom.

According to an official release, as the owner of approximately 81.5 per cent of Blockbuster's outstanding shares, Viacom anticipates receiving a cash payment of $738 million in the distribution free of income taxes.

JPMorgan, Citigroup and Credit Suisse First Boston have offered Blockbuster a financing commitment for a new $1.45 billion credit facility subject to customary conditions. It will be used to finance the special distribution and replace Blockbuster's current revolving credit facility.

Viacom expects the divestiture to be completed in the third quarter of 2004, says the release.

A special committee of independent directors of Blockbuster has unanimously recommended the credit facility, payment of a $5 per share cash distribution (subject to certain conditions), certain inter-company arrangements and the filing of the Blockbuster registration statement. In addition, both the Viacom and Blockbuster boards have approved the exchange offer and the inter-company arrangements, informs the release.

According to Viacom chairman and chief executive officer Sumner Redstone, "Viacom's separation from Blockbuster is a major event that begins a new chapter in the Viacom growth story and brings significant advantages for both companies as we pursue our separate paths to success. Following the split-off, Viacom will devote all its energies and resources into expanding in core areas, particularly the content creation engines that we believe will drive our future performance. The split-off, which is also expected to result in a reduction of Viacom's outstanding shares, enables Blockbuster to focus on its mission to become a specialty retailer of home entertainment."

While Blockbuster's chairman and CEO John Antioco offered, "We are pleased to be moving forward with our split-off from Viacom, and we believe that by becoming a separate company we will be better able to pursue our retailing strategy. Additionally, we believe issuing a special cash distribution will offer value to our stockholders without inhibiting us from executing our business plan."

The exchange offer will provide Viacom stockholders with the opportunity to exchange, on a tax-free basis, some or all of their shares of Viacom Class A or Class B common stock for shares of Blockbuster Class A and Class B common stock held by Viacom. The exchange ratio for the exchange offer will be set prior to the commencement of the exchange offer, informs the release.

Viacom currently owns 144 million shares of Blockbuster Class B common stock. Viacom has agreed to ensure the tax-free nature of the exchange offer and convert a portion of these shares of Blockbuster Class B common stock, on a one-for-one basis, into shares of Blockbuster Class A common stock prior to the completion of the exchange offer.

As a result of this conversion, the outstanding Blockbuster common stock after completion of the exchange offer is currently expected to consist of approximately 60 per cent Blockbuster Class A common stock and 40 per cent Blockbuster Class B common stock. After the transaction is completed, the number of votes per share of Blockbuster Class B common stock will be reduced from five votes per share to two votes per share, informs the release.

Latest Reads
Grofers forays into FMCG segment; targets Rs 2500 cr by FY 2019

MUMBAI: With an aim to disrupt the online retail market space, Grofers, the low price online supermarket, has announced its foray into the FMCG segment with the launch of seven new brands under two categories – Budget and Popular G-Brands.

MAM Marketing Brands
FBB launches campaign for sleepwear Shyla

FBB, India’s fashion hub by Future Group, is launching a campaign for its sleepwear brand Shyla.

MAM Media and Advertising Ad Campaigns
Piyush Prasad joins Harley-Davidson India

Piyush Prasad has joined Harley-Davidson India as manager for market operations, based out of Gurugram. In this position, he will report to Peter Mackenzie who is the managing director for Harley-Davidson India and China.

MAM Media and Advertising People
PhonePe acquires PoS platform Zopper

Flipkart-owned digital payments platform PhonePe, yesterday, announced that it has acquired Zopper Retail, a hyperlocal point-of-sale platform for small and medium businesses. As part of the acquisition, Neeraj Jain, founder-CEO, Zopper will join the PhonePe team as head of product, offline...

MAM Marketing Brands
Gas-O-Fast hands digital duties to Columbus India

Columbus India, the data-driven digital marketing agency from Dentsu Aegis Network, has been appointed as the digital agency for Gas-O-Fast, a product of Mankind Pharma.

MAM Media and Advertising Account
Alpenliebe Juzt Jelly pits jelly against jelly

Perfetti Van Melle brings up a new and unique campaign for its leading jelly brand Alpenliebe Juzt Jelly which focuses on bear and bottle shaped jellies in the portfolio in an entertaining manner.

MAM Media and Advertising Ad Campaigns
Kalyan Jewellers celebrates silver jubilee

Kalyan Jewellers has recently launched its new TVC, which features brand ambassador Amitabh Bachchan along with his daughter Shweta Bachchan Nanda.

MAM Media and Advertising Ad Campaigns
Flipkart, Amazon reduce ad spends on Google

With Google launching an e-commerce platform in the near future, the country’s largest online retail stores, Flipkart and Amazon India, have slashed advertising spends on the web-search company. Both the players see this as a serious threat, as a Mint report quoted two people, familiar with the...

MAM Marketing Brands
Apple India's three senior executives quit

Adding to the turbulent journey of telecom giant Apple in India, three senior executives have decided to quit the company.

MAM Media and Advertising People

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories