Shamrock to Purchase 2nd Music Store Chain

Shamrock Holdings, a Burbank investment firm owned by the family of Roy E. Disney, announced Monday that it agreed to pay $132.5 million for a Dallas chain of video and music stores.

The $25.65-a-share acquisition of Sound Warehouse, which has 121 stores in 14 states, marks the second purchase of a music and video chain by Shamrock in one year. Last April, Shamrock paid an undisclosed price for the 60-store Music Plus chain in Los Angeles.

The Music Plus acquisition followed an unsuccessful bid by Shamrock to buy still another music and video chain, Wherehouse Entertainment in Torrance, which sold for $118 million in December, 1987, to the New York investment firm Adler & Shaykin.

Meanwhile, Shamrock is continuing a hostile bid to buy Polaroid Corp., but its $2.4-billion offer for the instant photography giant received a setback last month. A Delaware Chancery Court ruling upheld a Polaroid employee stock plan that makes it difficult for Shamrock to buy Polaroid. Shamrock is appealing the decision to the Delaware Supreme Court.

For the year ended last May 31, Sound Warehouse earned $4.2 million on sales of $181 million.

Sound Warehouse’s stock fell from about $30 a share in 1986 to about $10 a share last spring. Dennis Telzrow, a securities analyst with the Eppler Guerin & Turner brokerage in Dallas, said the company has been hurt by the economic slump caused by soft oil prices in Texas, where Sound Warehouse has half of its stores.

The price paid by Shamrock is expected to also include a special dividend for Sound Warehouse shareholders of up to 10 cents a share, depending on what it costs to close the acquisition, which is expected to be approved by shareholders in April. Sound Warehouse’s stock closed at $24.625 a share in over-the-counter trading Monday, up $2.625.

Mark S. Siegel, a Shamrock executive vice president, said the Sound Warehouse acquisition is part of Shamrock’s goal to be a top seller of home entertainment products such as music and videocassettes. Siegel said that it also is part of a consolidation going on in the retail video and music industry.

Besides music and video stores, Shamrock owns three televisions stations, 15 radio stations and has interests in energy, real estate and ranching. Roy E. Disney also serves as vice chairman of Walt Disney Co. in Burbank.

Separately, another music and video chain sale was disclosed Monday by LIVE Entertainment in Newbury Park. It agreed to buy for an undisclosed price Beckzack Corp., owner of the Strawberries chain in Milford, Mass.

LIVE is the holding company for International Video Entertainment, which produces and distributes movies, and for Lieberman Enterprises, which distributes videocassettes and music to large stores. Strawberries, which has 79 stores in New England, upstate New York and the Philadelphia area, had $60 million in sales last year.