Company Town : Speculation Is Rekindled That Viacom, Blockbuster May Merge : Entertainment: But executive says Blockbuster chairman was misquoted in saying that deal looks like it will go through.
The merger between entertainment giants Viacom Inc. and Blockbuster Entertainment, once abandoned as a near-dead deal with only the slimmest prospects of revival, could be coming back to life.
Announced in January in the heat of the takeover battle for Paramount Communications, the $8.4-billion stock swap merger between Viacom and Blockbuster lost momentum as the value of Viacom’s Class B shares slipped. In recent months, however, Viacom’s stock has rebounded, fueling hope that the parties may be able to return to the table to forge a definitive agreement.
Speculation that the merger discussions might be back on track began Thursday, when a Miami Herald sports reporter quoted Blockbuster Chairman H. Wayne Huizenga as saying that “it looks like the Viacom deal is going to go through.”
Both Viacom and Blockbuster declined to comment on the remark. But a Blockbuster executive privately denied that Huizenga made the statement, saying he was misquoted by the newspaper.
Analysts expressed surprise that Huizenga would have tipped his hand.
“I’m kind of surprised he made the statement,” said Jeffrey Logsden, an analyst with The Cos. in Los Angeles.
“The Viacom guys on Monday during their conference call took great pains not to make any statements because of SEC rules . . . but stranger things have happened,” he said.
Nonetheless, Logsden said that as Viacom’s stock continues to climb, it appears increasingly possible that the merger deal could be back on track. The merger agreement is scheduled to expire at the end of September.
“I think there is a stronger possibility today that the prices of (Viacom’s and Blockbuster’s) securities are going to get within touching distance of the prices they previously agreed to in order to do the transaction,” he said.
Logsden said he thinks that Viacom’s stock needs to recover to about $38 a share for the deal to be revived.
Blockbuster’s stock was about $29 a share when the merger agreement was announced earlier this year. Viacom traded at about $41 a share and then plunged as low as $21.75 before rebounding. On Thursday, Viacom closed at $35.75 on the American Stock Exchange, down 12.5 cents. Blockbuster fell 50 cents to $27.50 on the New York Stock Exchange.