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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 18, 1994
BLOCKBUSTER ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or jurisdiction of incorporation)
0-12700 75-1849418
(Commission (IRS Employer
File Number) Identification No.)
One Blockbuster Plaza
Ft. Lauderdale, FL 33301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 832-3000
N.A.
Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On July 18, 1994, Blockbuster Entertainment Corporation (the
"Registrant") reached an agreement in principle with Discovery Zone, Inc.
("Discovery Zone") regarding a transaction in which Discovery Zone would
acquire all of the franchised Discovery Zone facilities and territories
currently owned by the Registrant in exchange for 4,500,000 shares of Discovery
Zone's common stock (subject to adjustment in certain circumstances). In
addition, the Registrant agreed in principle to exercise its option from DKB
Investments, L.P. pursuant to which the Registrant would increase its ownership
of Discovery Zone's common stock to approximately 50.1%.
Consummation of the transactions described above is subject, among
other things, to (i) such approvals by a special committee of the Registrant's
board of directors as such committee shall deem to be necessary; (ii) receipt
by such committee of an opinion from its financial advisor that such
transactions are fair to the registrant's stockholders from a financial point
of view; (iii) negotiation and execution of definitive agreements and (iv)
other customary conditions.
The descriptions herein of the agreements in principle are qualified in
their entirety by reference to the Press Release, dated July 18, 1994, attached
hereto as Exhibit 99 and which is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The Exhibits to this Report are listed in the Exhibit Index set forth
elsewhere herein.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BLOCKBUSTER ENTERTAINMENT CORPORATION
By: /s/ Thomas W. Hawkins
------------------------------------------
Thomas W. Hawkins
Senior Vice President, General Counsel and
Secretary
Date: July 19, 1994
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BLOCKBUSTER ENTERTAINMENT CORPORATION
EXHIBIT INDEX
Number and Sequential
Description of Exhibit Page Number
- - ---------------------- -----------
1. None
2. None
4. None
16. None
17. None
20. None
23. None
24. None
27. None
99. Press Release, dated July 18, 1994.
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Exhibit 99
LEAPS & BOUNDS MERGES WITH DISCOVERY ZONE; MCDONALD'S, BLOCKBUSTER AND
DISCOVERY ZONE JOIN FORCES IN FAMILY ENTERTAINMENT
CHICAGO, IL (July 18, 1994) -- Discovery Zone, Inc. (NASDAQ: ZONE) and
McDonald's Corporation (NYSE: MCD) today announced that they have reached an
agreement in principle by which Discovery Zone will acquire all of the
outstanding capital stock of Leaps & Bounds, Inc., a wholly-owned subsidiary of
McDonald's. Discovery Zone will issue to McDonald's 5,500,000 shares of
Discovery Zone common stock for the acquisition, which shares will be subject
to restrictions on resale and to adjustment under certain circumstances
customary in transactions of this type. Further terms of the transaction were
not disclosed. Leaps & Bounds owns and operates 49 children's indoor
entertainment and fitness facilities and certain related real estate across the
United States.
Discovery Zone also reported that Blockbuster Entertainment
Corporation (NYSE: BV) reached an agreement in principle to exercise its option
to increase its equity interest in Discovery Zone to 50.1 percent. Blockbuster
currently owns approximately 20 percent of Discovery Zone's common stock.
Blockbuster will acquire most of the additional shares of Discovery Zone from
DKB Investments, L.P., which is currently Discovery Zone's largest stockholder.
Separately, Discovery Zone and Blockbuster announced that they have
reached an agreement in principle whereby Discovery Zone will acquire all of
the franchised Discovery Zone FunCenters and territories currently owned by
Blockbuster. Discovery Zone will issue to Blockbuster 4,500,000 shares of
Discovery Zone common stock for the acquisition, which shares will be subject
to adjustment under certain circumstances customary in transactions of this
type. Blockbuster currently owns and operates 57 FunCenters.
Donald F. Flynn, Discovery Zone's Chairman and CEO, said, "Today marks
the beginning of a cooperative venture among Discovery Zone, Blockbuster and
McDonald's that results in a winning combination in children's entertainment.
The merger of the two pioneers in the industry -- Discovery Zone and Leaps &
Bounds -- combined with the ideas and resources of McDonald's and Blockbuster,
will produce a formidable company of enormous value to our customers and our
stockholders.
"Blockbuster was an early supporter of our concept, and has been an
outstanding partner in developing it. The exercise of their option is further
evidence of that support. Our acquisition of their FunCenters and territories
allows us to more efficiently develop our business and combine our resources.
"We welcome McDonald's as an equity investor in Discovery Zone, and we
look forward to a mutually beneficial relationship."
Michael R. Quinlan, Chairman and CEO of McDonald's Corporation, said,
"Combining Leaps & Bounds with Discovery Zone allows McDonald's to share in the
future growth in this dynamic industry, while also enabling us to stay sharply
focused on our global foodservice business."
Quinlan added that he expects the transaction to have an insignificant
impact on 1994 financial results.
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H. Wayne Huizenga, Chairman and Chief Executive Officer of
Blockbuster, commented that "the combination of Discovery Zone and Leaps &
Bounds creates a preeminent children's entertainment company. Out-of-home
entertainment for children is a rapidly expanding industry both domestically
and internationally. Our increased ownership of Discovery Zone will enable us
to capitalize on these growth opportunities while at the same time realizing
the benefits of cross-promoting these businesses with our video and music
stores."
Consummation of all three transactions is expected to occur in August
1994 and is subject to customary closing conditions, including expiration of
the waiting period under the Hart-Scott-Rodino Act.
CONTACTS:
Robert D. Mitchum, Senior Vice President and Chief Financial Officer,
of Discovery Zone, Inc., 312-616-3800
Chuck Ebeling, Director of Corporate Communications, or Patty Paul,
Director Financial Communications/Investor Relations, of McDonald's
Corporation, 708-575-6150
Gregory K. Fairbanks, Senior Vice President and Chief Financial
Officer, of Blockbuster Entertainment Corporation, 305-832-3000
