Blockbuster to Buy Erol’s Video Stores

Blockbuster Entertainment Corp. announced a $40-million deal to buy Erol’s Inc., which owns and operates 208 videocassette rental and sales stores in five states and the District of Columbia.

Blockbuster, the nation’s largest video chain, will acquire Erol’s operations in exchange for cash, a note, Blockbuster common stock and debt assumption, the Ft. Lauderdale-based company said.

H. Wayne Huizenga, Blockbuster’s chairman and chief executive officer, said the agreement in principle “provides an outstanding opportunity for Blockbuster.

The sale is contingent on the execution of a definitive acquisition agreement.