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
Ogilvy India makes key top-level appointments

MUMBAI: Advertising agency Ogilvy India has announced the appointment of Prem Narayan as its new chief strategy officer and Balagopalan Ganapathy as the new head of planning, Ogilvy Mumbai. Narayan and Ganapathy have started in their respective roles with immediate effect.

MAM Media and Advertising People
SVG Columbus debuts with big wins at IAMAI's 8th India Digital Awards

SVG Columbus has been honoured with 2 Golds and 1 Silver by the Internet & Mobile Association of India (IAMAI) on its debut. For the record, SVG Media was acquired by Dentsu Aegis Network in April 2017. Post the acquisition, SVG Media launched Columbus – an agency focused on Data Driven...

MAM Marketing MAM
81% Indians find ads intrusive: KMB study

MUMBAI: A well-executed multichannel campaign is a thing of beauty. But over one in four of the campaigns we see are not well integrated, and consumers are much more critical than marketers about campaign connectivity. Also, less than half of all campaigns take full advantage of different channels...

MAM Marketing MAM
Vivo YouTube campaign saw better response using Vogon

MUMBAI: Chinese smartphone brand Vivo rolled out a digital campaign - ViewTube, giving a new wave to YouTube’s ongoing TrueView Ads. With the launch of its V7 model, Vivo leveraged Google’s Director Mix tool to launch a campaign that offers a unique creative solution to gauge higher viewer...

MAM Marketing MAM
Big Bazaar launches game to promote R-day sale

MUMBAI: Hypermarket chain from Future Group, Big Bazaar, has created a mobile game to promote its mega property, ‘Big Bazaar Sabse Saste 5 Din’. Designed and executed by L & K Saatchi & Saatchi, Big Bazaar’s innovative deal game is set to transform the shopping experience in India....

MAM Marketing Brands
Inito gives anxious couples hope through its new ad

The desire to have children is something that is harboured by millions of couples. But, in the eagerness to do so, many times this whimsical process ends up becoming strenuous and stressful for many. In order to help beat the woes for many such couples, Inito, a medical technology company, has...

MAM Marketing Brands
Vernacular content consumers to be 2.5 times English by 2021: Deloitte

MUMBAI: Deloitte India has launched the eighth edition of its report on technology, media and telecommunications which predicts major advances in machine learning, voice over LTE (VoLTE) technology services and over-the-top (OTT) platforms, apart from other trends.

MAM Marketing MAM
IAA's new initiative seeks to end rigidity in office timings

A new social initiative titled #WorkToLiveToWork has been undertaken by the International Advertising Association’s (IAA) India chapter with Nandini Dias, managing committee member of IAA and CEO of Lodestar India, at the helm. Dias lost two colleagues in separate accidents related to railways...

MAM Media and Advertising People
PVR promotes cleaner air

MUMBAI: Cinema exhibition company PVR Pictures has launched a new campaign called, #BeTheCommuter with an aim to promote clean air and curb pollution.

MAM Marketing Brands

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories