Shamrock Holdings Agrees to Buy 54-Store Music Plus Chain
Shamrock Holdings, a Burbank investment firm that waged an unsuccessful battle last December for Wherehouse Entertainment, said Thursday that it has agreed to buy rival music and video retailer Music Plus.
Shamrock declined to say how much it will pay for the 54-store Southern California chain.
The purchase continues a wave of consolidation in the industry. In December, Wherehouse, the dominant chain in Southern California, avoided a takeover by Shamrock by agreeing to a $118-million buyout by Adler & Shaykin, a New York investment firm.
And in February, top management of Musicland, the nation’s largest music and video retailer and operator of the Sam Goody stores in California, agreed with other investors to buy the company from Primerica, parent of Smith Barney Inc., for $410 million.
The deals “are an extremely strong indication that this is a good business,” said Keith E. Benjamin, a research analyst with the New York investment house of Silberberg, Rosenthal & Co. “Some smart people are trying to get bigger.”
Given the price paid for the 212-store Wherehouse operation, Benjamin hazarded a guess that the well-regarded Music Plus would garner in the range of $25 million to $50 million.
Benjamin noted that Music Plus has excellent locations and attractive stores similar to those of Wherehouse, which views Music Plus as a formidable competitor, particularly in the rental and sale of videocassettes.
Shamrock President Stanley P. Gold said in a statement that the purchase “fulfills Shamrock’s strategy of obtaining a significant position in the retailing of home entertainment software.” Shamrock is owned by Roy E. Disney, a nephew of the late Walt Disney, and his family.
Since last fall, Shamrock has been looking to reinvest some of the $125-million profit from the sale of its Central Soya soybean processor in Fort Wayne, Ind., to Ferruzzi Group of Italy.
Recently, Gold said that Shamrock has wanted to expand into specialty retailing for some time and that it considered the business of selling tapes, records, videos and computer software to be relatively resistant to recessions.
Under the deal, the five owners of Show Industries, the parent company of Music Plus, will sell their shares to Shamrock for cash. Show Industries President Louis C. Fogelman, a founder of Wherehouse Entertainment who left in 1974 to start Music Plus, will remain as president and chief executive of the new venture and will share in the equity. Two other shareholders--David Marker and Pat Moreland--will remain active in the business, Shamrock said.
Show Industries also operates City One Stop, a wholesale supplier of entertainment software. Among home entertainment retailers, its Music Plus stores are the exclusive agents for Ticketmaster, a computerized ticket network for theater, concert and sports events.
Times staff writer James Bates in the San Fernando Valley contributed to this story.