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SUPPLEMENT NO. 1, DATED JANUARY 7, 1994,
TO PROSPECTUS DATED NOVEMBER 29, 1993
On January 7, 1994, Blockbuster Entertainment Corporation, a
Delaware corporation (the "Company"), and Viacom Inc., a Delaware corporation
("Viacom"), entered into an Agreement and Plan of Merger, dated as of January
7, 1994 (the "Merger Agreement") under which the Company would merge with and
into Viacom, with Viacom being the surviving corporation (the "Merger"). Under
the terms of the Merger Agreement, as of the effective time of the Merger, each
outstanding share of the Company's common stock, par value $.10 per share (the
"Common Stock"), other than any shares of Common Stock held in treasury of the
Company, or owned by Viacom or any direct or indirect subsidiary of Viacom or
the Company and any dissenting shares (if applicable), shall be converted
automatically into the right to receive (i) .08 of one share of Viacom Class A
Common Stock, par value $.01 per share ("Viacom Class A Common Stock"), (ii)
.60615 of one share of Viacom Class B Common Stock, par value $.01 per share
("Viacom Class B Common Stock"), and (iii) up to an additional .13829 of one
share of Viacom Class B Common Stock, with such amount to be determined in
accordance with, and the right to receive such shares to be evidenced by, one
variable common right (a "VCR") issued by Viacom. In addition, employee stock
options and warrants outstanding as of the effective time of the Merger will
become exercisable thereafter for the Merger consideration described above.
Pursuant to the terms of the Company's stock option plans, the vesting of the
employee stock options will be accelerated in connection with the Merger.
The VCRs convert into Viacom Class B Common Stock under
certain circumstances. The number of shares into which the VCRs convert will
generally be based upon the highest 30 consecutive trading day average price of
the Viacom Class B Common Stock during the 90 trading day period prior to the
conversion date, which occurs on the first anniversary of the completion of the
Merger. In the event that such value is more than $40.00 per share but less
than $48.00 per share, the VCRs will convert into the right to receive .05929
of a share of Viacom Class B Common Stock at a value of $36.00 per share or, if
such value is above $48.00 per share, the number of shares into which the VCR
will convert will decrease ratably to have no value at a price of $52.00 per
share. The upward adjustment in the value of the VCR in excess of .05929 of a
share of Viacom Class B Common Stock will not be made in the event that, during
any 30 trading day period following the completion of the Merger, and prior to
the conversion date, the average closing price exceeds $40.00 per share. In
the event that during any such period such average price exceeds $52.00 per
share, the VCR will terminate.
Consummation of the Merger is subject to certain conditions,
including, among other things, approval of the Merger by the stockholders of
the Company and Viacom, the expiration or termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, receipt of
certain regulatory approvals and confirmation that the Merger qualifies as a
tax-free reorganization for federal income tax purposes. In addition, the
Merger Agreement provides that the Company will reimburse Viacom for its
transaction-related expenses if the Merger Agreement is terminated and certain
other conditions are met, up to a maximum of $50 million.
In addition, the Company and National Amusements, Inc., the
majority stockholder of Viacom ("NAI"), have entered into a Voting Agreement
dated as of January 7, 1994 (the "Voting Agreement"), pursuant to which NAI has
agreed to vote the shares of Viacom Class A Common Stock held by it in favor of
the Merger and the Merger Agreement at any meeting of the stockholders of
Viacom and in any action by consent of the stockholders of Viacom.
Concurrently with the execution of the Merger Agreement, the
Company and Viacom entered into a subscription agreement, dated as of January
7, 1994 (the "Subscription Agreement"), pursuant to which the registrant has
agreed to subscribe for and purchase from Viacom, and Viacom has agreed to
issue and sell to the Company, 22,727,273 shares of Viacom Class B Common
Stock, for an aggregate purchase price of approximately $1,250,000,000
representing a purchase price of $55.00 per share.
The obligations of the Company to consummate the purchase and
sale under the Subscription Agreement are subject to, among other things,
Viacom having accepted for payment 50.1% of the outstanding shares of common
stock of Paramount Communications, Inc. on a fully diluted basis pursuant to
its tender offer therefor.
Additionally, pursuant to the Subscription Agreement, Viacom
has granted to the Company customary registration rights with respect to the
shares of Viacom Class B Common Stock purchased thereunder.
The Subscription Agreement provides that in the event the
Merger Agreement is terminated (other than by Viacom as a result of a breach of
a representation, warranty, covenant or agreement of the Company contained
therein), the Company has certain rights in the event that the Viacom Class B
Common Stock trades at levels below $55.00 per share during the one year period
after such termination.
